The SALT cap, which limits state and local tax deductions to $10,000, is being increased to $40,000 starting in 2025. Homeowners in high-tax states, particularly California, New Jersey, and New York, have been disproportionately affected as rising property values resulted in tax bills that exceed the limit. This change comes after a political standoff, driven by GOP House members seeking increased tax relief for their constituents. The adjustment aims to alleviate financial burdens faced by middle-class families in these areas.
The federal limit on state and local tax deductions, known as the SALT cap, will increase from $10,000 to $40,000, beginning in 2025, significantly benefiting homeowners.
Homeowners in high-tax states have faced challenges with the SALT cap, as rising property values and taxes push many families above the $10,000 deduction limit.
The cap, introduced in the 2017 Tax Cuts and Jobs Act, aimed to offset broader tax cuts, but has become a political issue as it limits deductions for homeowners.
The deal reached by lawmakers marks a major victory for homeowners in states like California, New Jersey, and New York, where higher property tax bills prevail.
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