Bigger SALT Break Delivers Tax Savings In Unexpected Places
The expanded state and local tax deduction championed by New York lawmakers is gaining favor around the U.S., benefiting well-heeled taxpayers in states like Ohio, Colorado, North Carolina, Michigan and Pennsylvania.
“I saw benefits for clients in many states outside of the usual suspects,” said Emily Shacklett, a Cleveland-based managing director at Hightower Signature Wealth, who cited her experience with customers in each of those states.
Some counties in Florida and states in the Mountain West also stand to benefit from the bigger tax break, an analysis by the conservative-leaning Tax Foundation found.
Appreciation in home values—rising fastest among higher-end residences that generate especially expensive property tax bills—has broadened use of the deduction outside high-income tax states along the Northeast Corridor and West Coast, tax and wealth advisers across the country said.
The pattern described by tax professionals crosses the political battle lines that formed over expanding the break, which was aggressively pursued by representatives of high-tax, typically Democratic-controlled states.
That could build support for continuing the expanded break when it expires at the end of 2029, said Garrett Watson, vice president of federal tax policy of the Tax Foundation.
“The very fact that this is a temporary expansion means that I think we’re going to see this come back up again in 2029, in 2030,” Watson said. “It will be very much determined by how strong the SALT Caucus is.”
The SALT break, like all itemized tax deductions, is only relevant to a fraction of taxpayers. In recent years, about 90% of taxpayers haven’t taken any itemized deductions and decided they were better off with the alternative: taking the standard deduction, worth $16,100 for individuals and $32,200 for married couples filing together for 2026.
Largely because of the expanded SALT deduction, tax professionals around the country said they saw more clients itemizing deductions this year—though they anticipate it will still be a small minority of taxpayers overall.
The SALT break matters most to taxpayers who are affluent—but not too affluent.
Higher-income taxpayers pay more in state and local income taxes and, because their homes are usually more valuable, tend to be hit with larger local property taxes. But the expanded break is of no use to the wealthiest Americans. The maximum SALT deduction—set at $40,400 this year—starts to phase down for households with more than $505,000 in annual income.
A handful of House Republicans from New York, New Jersey and California forced the temporary expansion of the SALT deduction—previously capped at $10,000—by sticking together and threatening to withhold support from President Donald Trump’s signature tax law. The Republican margin in the House was so narrow they had the power to block the legislation.
Rising Property Values
The value of luxury homes—those estimated to be in the top 5% of their metro area’s price range—rose more than 5% from a year earlier and 17% over the past three years, according to a recent Redfin analysis of U.S. sales data. Median prices surged by double digits over the past year alone in hot Florida markets such as Tampa, Miami and West Palm Beach.
It will be years before the IRS releases data showing exactly how many taxpayers took advantage of the higher SALT deduction and their geographic locations. But analysis by the Tax Foundation showed some surprising winners, including counties in Florida, Georgia, Colorado, Idaho, Wyoming and Utah.
Residents of Miami-Dade County in Florida stand to receive nearly $260 million in collective tax savings from the larger SALT break in 2027, according to the analysis. Nearby Palm Beach should see a collective $321 million in tax savings. The results are all the more striking because Florida doesn’t have an income tax.
Many Kansas clients of Michele Hammann also benefited, in part because of the state’s “surprisingly high” property tax rates, she said. Clients making less than the income phase-out were able to save from $2,000 to $5,000 when they filed taxes earlier this year, compared to the year before, said Hammann, a partner and regional vice president at Merit Financial Advisors.
‘Hefty Tax Savings’
In many cases, the higher SALT deduction is attractive because taxpayers have other itemized deductions such as mortgage interest, medical expenses or charitable contributions that already put them near the threshold of giving up the standard deductions, several tax professionals said.
For example, Utah had the fourth highest share of taxpayers claiming the SALT deduction in 2022, according to the Bipartisan Policy Center—despite a flat 4.55% state income tax. That’s because many residents tithe a portion of their income to the Church of Jesus Christ of Latter-day Saints, widely known as the Mormon church, and itemize to deduct charitable contributions, said Ryan Cramer, a shareholder at the Utah-based CPA firm Savage Esplin & Radmall.
Hightower’s Shacklett said many of her clients in lower-tax states this year crossed the threshold to forgo the standard deduction because of the higher SALT cap.
“They were pretty close to their itemized deductions being better than the standard deduction to begin with. Then you tack on this increase of $30,000 to the SALT and boom! All of a sudden you’ve got some pretty hefty tax savings,” she said.
A couple in Georgia just under the phase-out for the higher deduction saved around $6,500, she said. One single filer in Ohio collected just over $6,000 in savings this year when she itemized, thanks to the cumulative impact of state, municipal and property taxes, along with charitable contributions and mortgage interest, Shacklett said.
“I would not say this this an outlier necessarily in a state like Ohio,” she said. “It’s more mainstream than people want to claim.”
This article was provided by Bloomberg News.
