10 States That Will Benefit Most From SALT Deduction Cap Increase

Yahoo

5 days ago

President Donald Trump's Big Beautiful Bill that passed in Congress in July 2025 included a provision to raise the state and local tax (SALT) deduction cap to $40,000 from the previous $10,000. 'An additional $30,000 in deductions could amount to about $10,500 in annual tax savings for such homeowners, assuming a 35% federal marginal tax rate,' Realtor.com senior economist Jake Kimmel said in an email.
Realtor.com broke down the 10 states and 10 metropolitan areas with the highest percentage of properties with taxes over $10,000, that stand to really benefit from the SALT cap increase.
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Top 10 States With Highest Share of Properties Taxed Over $10,000
NJ
39.9%
NY
25.9%
CT
19.4%
CA
19.3%
MA
18.4%
NH
16.3%
DC
15.6%
IL
13.7%
TX
12.4%
RI
9.3%
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Top 10 Metros With Highest Share of Properties Taxed Over $10,000
San Jose-Sunnyvale-Santa Clara, CA
47.9%
New York-Newark-Jersey City, NY-NJ
47.8%
San Francisco-Oakland-Fremont, CA
40.9%
Bridgeport-Stamford-Danbury, CT
39.3%
Kiryas Joel-Poughkeepsie-Newburgh, NY
37.5%
Trenton-Princeton, NJ
35.8%
Nantucket, MA
35.5%
Austin-Round Rock-San Marcos, TX
32.0%
Jackson, WY-ID
28.7%
Santa Cruz-Watsonville, CA
28.1%
Presumably, these areas will benefit the most from the SALT deduction cap increase. 'The winners of this deduction will most definitely be the middle- to upper-middle-class earners of high-tax states,' said Tasha Preisner, managing partner at DeMar Consulting Group.
But, even if you fall into this category, there are important considerations before you jump to begin itemizing deductions again.
The Return of Itemizations for Some Taxpayers
The Big Beautiful Bill also brings about an increase in the standard deduction up to $15,750 for single taxpayers and $31,500 for joint filers. This is still less than the SALT cap, which means it might make sense for some taxpayers to itemize in 2025.
'Many homeowners stopped itemizing their taxes after the 2017 TCJA [was introduced] … and the standard deduction was expanded, giving little incentive for itemization,' Preisner said. 'These homeowners will likely start itemizing again.'
But itemizing requires careful tax prep, saving receipts and potentially seeking the help of experts. 'More taxpayers will be turning to professionals to help them with their tax planning and tax preparation rather than doing it themselves,' Preisner predicted.
Tax Planning To Maximize Deductions
The SALT cap deduction increase phases out as income rises, with anyone earning $600,000 or more subject to the $10,000 cap. Preisner said this may change how some wealthier individuals handle tax planning.
'Those that earn close to the phase-out limit will structure their 'on-paper' income to show income that is less than the MAGI to be able to qualify for the extra deductions. It may discourage taxpayers from making Roth conversions, [taking] capital gains or taking extra bonuses,' she said.
Even those who aren't on the fence, income-wise, might change their behavior to maximize their itemized deductions. 'This is going to revive interest in taxpayers giving to charities and keeping their medical receipts as these deductions add to the SALT deductions, increasing their overall itemized deduction capacity,' she said.
Real Impact on Real Estate
Preisner said the change has potential to affect the real estate market in high-tax areas, as well.
'It may influence taxpayers' relocation decisions to higher-taxed areas,' she said. 'It may also encourage real estate purchases in 2025 through 2029 but dampen the housing market in 2030 when the cap drops back to $10,000.'
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This article originally appeared on GOBankingRates.com: 10 States That Will Benefit Most From SALT Deduction Cap Increase