Map Shows States Where Homeowners Benefit Most From SALT …

Homeowners in some of the most expensive housing markets in the country could reduce their annual tax bills by thousands of dollars thanks to a higher SALT cap, which is set to increase by 1 percent each year from 2026 through 2029.

Home values alone, however, are not a guarantee for homeowners to benefit from the tax rule change. The increase is likely to make more of a difference in high-income, high-tax states—such as New York and California.

What Is the SALT Cap, and How Is It Changing?

The state and local tax (SALT) deduction allows certain taxpayers to reduce their federally taxable income by the amount of state and local taxes they paid that year. Before the recently introduced increase, the SALT cap was $5,000 for married taxpayers filing separately and $10,000 for all other filers.

In July, President Donald Trump signed into law the One Big Beautiful Bill Act, which significantly increased the SALT cap deduction for 2025. Married couples filing separately can now deduct up to $20,000 of property, sales or income taxes already paid to state and local governments for this tax year, while everyone else can deduct up to $40,000.

This increase, however, is subject to a phasedown if a taxpayer’s modified adjusted gross income exceeds $500,000 for 2025 and $505,000 for 2026.

The deductible amount must be a combination of property taxes plus local and state income taxes or state and local sales taxes, but not both. 

By its nature, this year’s SALT cap increase is particularly advantageous for taxpayers living in high-tax, high-income states as it avoids double taxation. These often include taxpayers in states such as California, Connecticut, New Jersey and New York.

Taxpayers in states with low or no income tax, such as Texas and Louisiana, would find it more beneficial to calculate their deductible amount based on their sales tax.

In What States Will Homeowners Benefit the Most From the Change?

Based on an analysis by Redfin, which took into consideration only property and income taxes, the largest share of homeowners who stand to benefit from the SALT cap increase is in the District of Columbia, with a total of 97.9 percent.

Redfin estimated the share and amount of relief to households that could benefit from the SALT cap increase, assuming they itemize their deductions—though many might eventually decide to stick to the standard deduction available to them instead.

In D.C., the median savings obtained by homeowners itemizing SALT deductions should be $7,200, while the median SALT deductions if the homeowners itemized deductions should be $40,000. Here, the median home value, based on 2023 Census data, is $724,600.

The states where the largest share of homeowners stand to benefit from the raised SALT cap include Massachusetts (85.5 percent), New Jersey (84.2 percent), Oregon (79.8 percent), New York (75.8 percent) and California (74.3 percent).

By comparison, only 1 percent of households in Tennessee and Nevada are expected to benefit from the SALT cap increase. These states, which do not have a state income tax, are also among the bottom five in the country for the amount they can save each year based on the higher SALT cap. Affected homeowners are expected to save an estimated $1,090 in Nevada and $1,097 in Tennessee.

After D.C., the largest savings in the nation could be made by homeowners in New York, whom the higher SALT cap could help save $7,092 annually. California followed with $3,995 in estimated savings, New Jersey with $3,897, Massachusetts with $3,835 and Connecticut with $3,133.

What Could Be the Effect of Higher SALT Cap Deductions?

For some homeowners across the country, the higher SALT cap could bring significant savings. For most, however, the increase is likely to have little to no effect. 

Asad Khan, a senior economist at Redfin, said the recent SALT cap changes were unlikely to bring prices up—at least in most states. In those where a high share of homeowner households are affected—such as New York, California and other coastal states—higher savings could push prices up.

“Homebuyers in states like Illinois, where the potential tax savings are high relative to home prices, may look at the new SALT cap as an opportunity to increase their homebuying budget,” Khan said in the report. “Theoretically, that could lead to an increase in demand, and higher prices.”