The SALT Deduction Just Changed. Here’s What It Means for Your 2025 Taxes
A major itemized deduction just got a massive upgrade for 2025: the SALT (State and Local Tax) deduction cap increased from $10,000 to $40,000.
This change fundamentally reshapes tax planning for homeowners, high-income earners, and anyone paying significant state income or property taxes. For years, many taxpayers were effectively shut out of itemizing. In 2025, that may no longer be the case.
In this video Matt breaks down what changed — and why it matters.
What is the SALT Deduction?
The SALT deduction allows taxpayers who itemize to deduct certain state and local taxes paid, including:
- State and local income taxes (or sales taxes, if you choose)
- Property taxes on real estate
Since 2018, this deduction has been capped at $10,000, which limited the benefit for many taxpayers, especially in higher-tax states.
Who Benefits Most?
This change is especially impactful for:
- Homeowners with high property tax bills
- High-income earners in states with higher income tax rates
- Real estate investors with significant property tax expenses
- Taxpayers who were previously forced into the standard deduction due to the low SALT cap
If you were just barely missing the itemized deduction threshold before, this change could push you back into itemizing — and significantly lower your taxable income.
