MW Here's where the new $40,000 SALT deduction in Trump's big bill helps homeowners the most

Andrew Keshner

Home prices could creep up in high-tax areas as more home buyers seek to benefit from the SALT deduction

President Donald Trump's new tax law creates both winners and losers - and certain homeowners are poised to win big from the law's higher deduction for state and local taxes.

The One Big Beautiful Bill Act is temporarily raising the state and local tax deduction to at least $40,000, up from $10,000, for the next five years. Now it's up to taxpayers to see if they can take advantage of this extra generous write-off, which is often referred to as the SALT deduction.

People living in New York City's metro area and California's Bay Area should be watching closely, according to an analysis from Realtor.com in the wake of the law. Those are the two areas that have the largest share of properties with tax bills over the $10,000 mark.

Nearly half of residential properties in San Jose, Sunnyvale and Santa Clara - 47.9% - are paying at least $10,000 in property taxes. That's on top of whatever state income taxes these homeowners are paying, which can also be deducted under SALT rules.

Likewise, almost half of homeowners in the New York City, Newark, N.J., and Jersey City, N.J. region - 47.8% - are paying at least $10,000 in property taxes. That's also in addition to their state income-tax bill.

Around 4 in 10 properties in the San Francisco-Oakland area pay over $10,000 and the same goes for properties in Connecticut's Bridgeport, Stamford and Danbury area, according to the Realtor.com list. And more than one-third of properties in New York's Hudson River Valley area near Poughkeepsie and Newburgh have property-tax bills over $10,000.

See also: Will Trump's megabill cut your taxes? Check this number on your tax return for the answer.

The bigger SALT deduction passed after intense debate on Capitol Hill. A number of lawmakers in the SALT caucus that pressed for the bigger deduction represent the high-tax areas that are high on Realtor.com's list. The list of the most impacted areas may be more fodder for critics who said the higher deduction is an unfair giveaway to wealthier taxpayers who can afford to live in high-cost communities.

The temporarily higher SALT deduction could sway home buyers' decisions about where to look for housing, said Jake Krimmel, Realtor.com's senior economist.

"Raising the SALT cap creates a greater incentive to own in expensive, high-tax neighborhoods, such as affluent suburbs with high property taxes and good schools," Krimmel said. "As demand for these neighborhoods rises, expect home prices to edge up there, too."

New Jersey, New York, Connecticut, California and Massachusetts are the top five states with the highest share of properties taxed over $10,000. There are also standouts elsewhere.

Nearly one-third of households in Texas's Austin, Round Rock and San Marcos area have property-tax bills above $10,000. Nearly 30% of properties in the Jackson, Wyo., area and nearby Idaho communities are paying at least $10,000. Texas and Wyoming have no state income tax.

The Realtor.com analysis counted the current tax-assessment values of homes, townhouses and condominiums as of July. (Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

SALT tax planning going forward

Just because someone's paying more than $10,000 in property taxes, it doesn't mean they'll automatically be taking the SALT deduction. Taxpayers need to itemize their deductions in order to take the SALT write-off.

What people need to consider is whether the sum of their state and local tax expenses and all their other itemized deductions will be larger than what they can get in the standard deduction.

The standard deduction is rising this year to $15,750 for single filers and $31,500 for married couples filing jointly. The amount increases with inflation after that.

The $40,000 SALT deduction will run through 2029. For now, it's scheduled to fall back to $10,000 in 2030. During that five-year span, the deduction will increase slightly. The income limit this year is $500,000 modified adjusted gross income for individuals and married couples filing jointly. Beyond that point, the deduction phases out. For married couples filing separately, the 2025 limit for the full deduction is $250,000.

Being able to deduct more state and local tax expenses may make it easier for more people to itemize instead of taking the standard deduction, experts told MarketWatch. Taxpayers should track their potentially deductible expenses to know how to proceed.

"More people in states with higher income taxes and property taxes that exceed the previous $10,000 limit could choose to itemize," said Andy Phillips, vice president of H&R Block's $(HRB)$ Tax Institute. That's "particularly if they also have deductions for charitable donations, mortgage interest - including premium mortgage insurance, which are deductible again starting in 2026 - and medical expenses."

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-Andrew Keshner

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July 10, 2025 13:46 ET (17:46 GMT)

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