This is the last part of a four-part series.
A friend called John Nersesian, the founder of Nersesian Wealth Education, after realizing a large investment gain and losing a tax deduction connected to his business. The sale produced a profit, Nersesian said, but also raised income enough to affect another part of the tax return.
That experience illustrates the wealth educator’s concern about treating financial decisions in isolation. In his interview with me, he discussed income limits on business deductions and newer tax benefits, including the expanded state and local tax deduction.
Below is a transcript of the interview with Nersesian, edited for brevity and clarity.
How can a capital gain affect a business deduction?
John Nersesian: I had a friend who called me last year who is self-employed and entitled to this Section 199A deduction, but he lost it. Unknowingly, he realized a really large capital gain in his portfolio.
That’s ordinarily a good outcome, right? What he didn’t realize is that recognizing the gain increased his income. By increasing his income above the threshold, the individual lost the 20% deduction he otherwise would have been entitled to.
Bob Powell: Sometimes people are tax-averse for the wrong reasons, right?
Nersesian: Let’s make sure we really understand the implications of income, capital gains, and taxes. Paying taxes means you were successful in your career and compensated well, or you had another source of income through a successful investment decision.
Those are good events, generally speaking. But I think all of us want to be tax-smart and not pay any more than is required through some smart planning.
By increasing his income above the threshold, the individual lost the 20% deduction he otherwise would have been entitled to.
Why review eligibility for the business income deduction?
Nersesian: It’s called the Section 199A deduction, otherwise known as QBI. If you’re in a specialized service business, lawyers, financial services people, accountants, there’s a phaseout.
Having income above a certain threshold may cause an individual to lose that valuable deduction. Have a conversation with your financial planner and tax adviser about your expected level of income and how you can proactively manage it.
What can limit the larger SALT deduction?
Powell: The SALT deduction increase to $40,000 was part of the One Big Beautiful Bill Act (OBBBA). Folks will have a limited window to enjoy that expanded deduction, right?
Nersesian: Yes. Many of the updated deductions for individuals took effect in 2025 or 2026, but several have scheduled expiration dates. It’s like that carton of milk in the back of your refrigerator: You’d better drink it quickly before it goes bad.
For 2026, the SALT cap rises slightly to $40,400 (up from $40,000 in 2025). Once your modified adjusted gross income exceeds $505,000, that deduction phases down at a rate of 30 cents per dollar over the threshold.
It will never drop below the $10,000 statutory floor if you paid that much or more in qualifying state and local taxes, but high earners won’t receive the full benefit.
Why look beyond the advertised tax break?
Nersesian: We all read about these really great tax breaks we were going to receive. The taxman giveth and the taxman taketh away.
Many of the benefits we heard about with a lot of media and fanfare are subject to a phaseout. Either they’re set to expire down the road, or they’re not available for high-income earners.
Related: The year-end RMD trap: Why waiting until late December could cost retirees 25%