The $40,000 cap would begin this year, with the same $500,000 income phaseout, and both figures would rise by 1% annually from 2026 through 2033.

The version of the 'big beautiful' spending bill that passed the Senate permanently extends Trump's 2017 tax cuts.

The White House has said workers benefiting from the deduction could see up to $2,000 in annual federal tax savings.