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Earn between $500K and 600K? Here’s why you need to watch out for Trump’s ‘SALT torpedo’ penalty this tax season
Yahoo Finance· 2026-02-14 14:00
Tax Strategies and SALT Limit Impact - The article discusses strategies to keep taxable income below the $500K threshold to avoid increased tax liabilities, particularly through the use of tax-efficient ETFs instead of mutual funds [1][5] - The new SALT (state and local taxes) deduction limit has sparked debate, with some lawmakers arguing it unfairly penalizes residents in higher-tax states, while proponents believe it grants states more authority over tax rates [2] - High earners with adjusted gross income (AGI) over $500K face a "SALT torpedo," which can increase their effective tax rate by 30% due to a phaseout of benefits [3] Investment Opportunities - Commercial real estate investments can provide tax efficiencies through 1031 exchanges, allowing deferral of capital gains taxes when reinvesting in new assets [6] - A real estate investment platform, mogul, offers fractional ownership in high-quality rental properties, providing monthly rental income and tax benefits [7][8] - Each property on the platform is vetted for a minimum 12% return, with an average annual internal rate of return (IRR) of 18.8% and cash-on-cash yields of 10% to 12% [8] Financial Management and Advisory Services - Wealth management services like Range provide tax projections to help clients navigate investment decisions and optimize tax implications [12] - Financial advisors can assist in structuring finances to avoid the SALT torpedo by investing in sheltered assets and maximizing IRA contributions [14]