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Bigger Refunds Ahead? What the New SALT Cap Means

April 15, 2026 · Taxes
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Photo by Africa Studio from Shutterstock

The cap on the State and Local Tax (SALT) deduction is set to increase from $10,000 to $40,000 starting in 2025 under the proposed One Big Beautiful Bill Act (OBBBA). This change could significantly impact taxpayers—especially those in high-tax states—by allowing larger itemized deductions and potentially bigger tax refunds.

Tax experts say this update may shift how Americans file their taxes. In 2024, roughly 90% of taxpayers chose the standard deduction, according to former IRS auditor and tax professional Ruth White. However, with the higher SALT cap, more people—particularly homeowners—may benefit from itemizing their deductions in 2025.

White notes that many middle-income clients are already seeing the effects: despite earning $10,000 to $20,000 more in 2025, they’re paying less in income taxes due in part to the revised SALT rules.

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