2. SALT Deduction Cap Increases to $40,000

One of the most significant wins for homeowners—especially in high-cost states—comes from changes to the State and Local Tax (SALT) deduction.

A Major Break for High-Tax Homeowners

Under the new law, taxpayers earning under $500,000 annually can deduct up to $40,000 in combined state and local taxes, including:

• Property taxes
• State income taxes
• Local taxes

This expanded SALT cap applies to tax years 2025 through 2029 and will increase slightly each year by about 1%.

Previously, the SALT deduction was capped at just $10,000, a limit imposed by Trump’s 2017 Tax Cuts and Jobs Act. Before 2018, there was no SALT cap at all.

For homeowners in states like California, New York, New Jersey, and Illinois—where property taxes and state income taxes are high—this change could translate into thousands of dollars in annual tax savings.

According to financial analysts and tax planning experts, the expanded SALT deduction provides meaningful relief for middle- and upper-middle-income homeowners struggling with rising housing costs.