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If you’re a high-income associate at Walmart—especially someone eligible for the Deferred Compensation Matching Plan (DCMP)—the tax landscape shifted under your feet this year. In July, the Opportunity to Bolster the State and Local Tax (SALT) Deduction Act (OBBBA) changed the rules for who can claim a larger deduction for state and local taxes.
For years, the SALT deduction was capped at $10,000, a frustrating limit for those living in high-tax states. OBBBA reintroduces a more generous deduction—but with strict income phaseouts. Once your income climbs past certain thresholds, the enhanced deduction begins to shrink, and for many earners, it drops right back to the $10,000 floor.
Here’s why this matters: if you’re receiving substantial bonuses or have a high modified adjusted gross income (MAGI), deferring some of that income through the DCMP might lower your MAGI enough to reclaim part of your SALT deduction. In high-tax states, that could mean thousands—or even tens of thousands—of dollars back in your pocket.
How the OBBBA Changed the State and Local Tax (SALT) Deduction for High Earners
The OBBBA didn’t eliminate the $10,000 SALT deduction limit—but it did create a new income-based system that allows certain taxpayers to deduct more. If your income falls below a specific threshold, you can deduct up to $40,000 in state and local taxes. But as your income rises, the deduction is phased out gradually, until you’re back down to the $10,000 floor.
| Filing Status | Maximum SALT Deduction | Phaseout Begins (MAGI) | Fully Phased Out (SALT Floor) |
| Married Filing Jointly | $40,000 | $500,000 | $600,000 ($10,000 floor) |
For every $1 of income over the phaseout threshold, your maximum deduction is reduced by 30 cents. That means the deduction fully phases down by the time your MAGI hits the floor range.
If your income is just over the threshold, you could be losing out on thousands in deductions. But if you can reduce your MAGI—by deferring income, for example—you might reclaim part of that deduction.
How Walmart’s DCMP Can Help You Reclaim a Lost Deduction
Let’s look at how a high-income Walmart associate might use the DCMP to bring their income below the SALT deduction phaseout range—and why that might matter more than ever under OBBBA.
Example: Married Filing Jointly, MAGI of $650,000
- MAGI: $650,000
- Bonus: $150,000
- Eligible to Defer: 80% of bonus ($120,000)
At a $650,000 income level, this associate is $150,000 over the phaseout threshold. OBBBA reduces the SALT deduction by $0.30 for every dollar over:
- $150,000 × $0.30 = $45,000 reduction
- With a maximum deduction of $40,000, this associate is fully phased out and limited to the $10,000 SALT floor
Now, let’s say this associate defers $120,000 of their bonus through the DCMP:
- New MAGI: $530,000
- Now only $30,000 over the phaseout threshold
- $30,000 × $0.30 = $9,000 reduction
- New SALT deduction: $40,000 – $9,000 = $31,000
Bottom Line:
By using the DCMP, this associate recovers $21,000 in lost SALT deductions while also deferring taxes on $120,000 of income. In a high-tax state, that’s real money.
How the DCMP Works—and What You Need to Decide
The DCMP lets eligible Walmart associates defer a portion of their compensation on a pre-tax basis. It’s designed for corporate officers and highly compensated salaried associates.
Here’s what you’ll need to consider:
1. How Much to Defer
- Officers: Up to 80% of base salary and 100% of annual bonus
- Non-officers: Up to 80% of bonus
2. When You Want to Be Paid
- Lump sum: Paid out after separation
- Installments: Over 1–15 years
- In-service distributions: Schedule for future years while still employed
3. Where to Invest Your Deferrals
- Market-based investment options (e.g. stock and bond funds)
- Fixed-rate option (if eligible from previous participation)
A Tax Move Worth Exploring
If you’re in a high-income bracket and live in a high-tax state, the SALT deduction changes under the OBBBA deserve a second look. And if you’re eligible for Walmart’s DCMP, you may have more control over your taxable income than you think.
By deferring part of your compensation—especially a large bonus—you could reduce your modified adjusted gross income (MAGI) enough to recover a sizable portion of a lost SALT deduction. That means fewer dollars taxed at the top federal bracket, and potentially a larger deduction for the state and local taxes you’re already paying.
Of course, deferred compensation comes with trade-offs, including payout restrictions, market risk, and the unsecured nature of the plan. That’s why this strategy is best considered as part of a bigger conversation about your full financial picture.
Important Note: To take advantage of this for the 2026 plan year, salary and bonus deferral elections must be submitted by December 22, 2025. Even though the bonus won’t be paid until 2027, the decision must be made in advance—and once the window closes, it can’t be changed.
If this strategy aligns with your situation, now’s the time to talk to a qualified tax advisor or financial planner. The opportunity is there—but the window doesn’t stay open long.