It’s not often that headlines bring good news, but the recent increase in state and local tax (SALT) deductions is a win for homeowners — especially in high-cost states like California.
Property taxes in California can place a significant burden on homeowners. As Realtor.com reports, “With Congress approving a $40,000 cap, a significant portion of the state’s homeowners stand to gain meaningful financial relief.”* But just how much relief are we talking about? And how many Californians will benefit?
“Under the previous cap, 20.2% of California homeowners were unable to deduct their full property tax burden.”* With the new, higher SALT cap, only 1.8% of homeowners in the state will fall short of deducting the full amount. That’s a meaningful shift and a major benefit for a substantial number of Californians.
According to the National Association of REALTORS® (NAR), “Beginning with the 2025 tax year, you can claim up to $40,000 in SALT deductions, quadruple the $10,000 maximum in effect from 2018 through 2024.”** NAR supported this change because it directly benefits homeowners, and it will be reflected on your 2025 tax return.
While the previous $10,000 cap had minimal effect on states with lower property values and taxes, higher-tax states like California, New York, New Jersey, and Massachusetts will now see real relief. Homeowners in these states can deduct more — and keep more — after taxes.
There’s more good news: another part of the updated tax law “restores deductibility of private mortgage insurance premiums.”** Typically required when a buyer puts down less than 20% on a home, Private Mortgage Insurance (PMI) has long been a cost many newer homeowners have had to shoulder without tax relief. With this change, PMI premiums are once again tax deductible — helping newer homeowners reduce their taxable income.
If you have questions about how these changes may affect your future real estate decisions, reach out to us. We sell all over Southern California, work with Home Buyers and Home Sellers, homes that are pristine and ones that need some TLC. Call us!
