The increase of the state and local tax deduction cap from $10,000 to $40,000 will benefit many homeowners in Massachusetts. Previously, 18.4% of homeowners exceeded the cap, but now only 1.0% are expected to remain above the new limit. Major cities like Nantucket and Boston are significantly affected, with fewer households exceeding the cap under the new threshold. This change provides financial relief, particularly for those with higher property taxes and mortgages, encouraging homeownership in higher-tax neighborhoods.
Residents of high-tax states suffered the most with the previous cap on state and local taxes. Because their taxes far exceeded the cap, they were not able to deduct the full amount like residents in low-tax states.
The early beneficiaries of the new law will be homeowners who have a mortgage and pay significant property taxes.
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.
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