Increased SALT Cap Could Save Typical Impacted New York Homeowner $7,000 Annually

• The typical New York household impacted by the raised SALT cap will save $7,092  annually—the most of any state. 
• 86% of Massachusetts homeowner households could benefit from the increased SALT cap—the highest share of any state. In comparison, only 1% of households in Tennessee and Nevada are expected to benefit.
• States with high home values will generally benefit more than states with lower home values, but it’s not always the case, as every state has very different tax environments.
• Of the top 100 U.S. metros, New York’s Nassau County has the highest share of households who could benefit from the rule changes (96.1%) and the highest expected savings for impacted households ($7,200).

The typical New York homeowner impacted by the raised state and local tax (SALT) deduction cap could save more than $7,000 a year—the highest of any state. 

But the share of homeowners who benefit from the SALT cap increasing from $10,000 to $40,000—and how much they save—varies widely across the country. In some states, like Massachusetts, almost every homeowner could benefit, while in others, like Tennessee, only a small fraction are likely to be impacted.

This is according to a Redfin analysis which estimates the share of homeowner households (referred to as homeowners throughout the report) who could benefit from the increased SALT deduction cap—and their potential savings. The raised SALT deduction cap was introduced as part of President Trump’s “One Big Beautiful Bill Act.” It allows homeowners who itemize their tax breaks to deduct up to $40,000 from their federal taxes for state and local income taxes, property taxes and sales taxes.

Using local tax revenue, home value and income data, this analysis projects how much typical homeowners could expect to deduct if they itemize their deductions. In the report we project the share of homeowners who could benefit from the SALT cap increase. It’s important to note that the share of households who are likely to itemize their taxes will be smaller, as many homeowners will continue to take the standard deduction. See the detailed methodology at the end of the report for more details.

The typical New York homeowner impacted by the new cap will save $7,092 annually—the most of any state

The typical New York homeowner impacted by the increased SALT cap will save $7,092 annually. We estimate savings by first calculating how much the typical impacted homeowner could deduct under the new SALT rules, then applying a 24% marginal tax rate to the portion that exceeds the previous $10,000 cap.

California homeowner households impacted by the new cap will save the second-highest amount each year ($3,995), followed by New Jersey ($3,897), Massachusetts ($3,835) and Connecticut ($3,133).

Redfin Senior Economist Asad Khan said even though the savings are considerable, SALT changes are unlikely to push home prices up in most states, because relatively few homebuyers would be impacted by the increased cap. But in markets where a high share of homeowner households are affected—and the expected savings are high—there is more potential for prices to be affected.

“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,” he said. “Theoretically, that could lead to an increase in demand, and higher prices.”

The typical homeowner household impacted by the new cap in South Dakota will save $1,033 per year—the lowest of any state.

Alaska homeowner households impacted by the new cap will save the second-lowest amount each year ($1,052), followed by Nevada ($1,090), Tennessee ($1,097) and New Hampshire ($1,101). 

Khan said the five lowest states do not have a state income tax, meaning homeowner households are less likely to cross the old $10,000 SALT deduction cap.

“For households in these states, the only real way to benefit is if their home is valuable enough for property taxes to exceed $10,000,” he said. “Even then, the savings are relatively small, since many of these owners are just barely over the old limit.”

Massachusetts has the highest share of homeowners who could benefit from raised SALT cap

More than eight in 10 (85.5%) Massachusetts homeowners stand to benefit from the new tax rules if they choose to itemize their deductions—meaning they could deduct more than $10,000 (the old cap) in combined property, and state and local income taxes. That’s the highest share of any U.S. state.

The next highest shares are in New Jersey (84.2%), Oregon (79.8%), New York (75.8%) and California (74.3%). These states share one thing in common: expensive homes. All five are among the 10 states with the highest median home values.

Not all states with high home values will benefit equally from the tax changes

It’s worth noting, however, that not all states with high home values will benefit as significantly from the tax rule changes. 

For example, Washington has the fifth-highest median home value of all states, yet only 9.6% of homeowners stand to benefit from the increased cap. That’s because Washington has no state income tax, and its median property tax rate is a relatively low 0.84%. In Colorado, which has the sixth-highest median home value of all states, a low median property tax rate of 0.49% means only 15.3% of homeowners stand to benefit from the new rules.

Redfin’s Khan said reports on the cap increase have largely focused on homeowners in states with the highest home values—and therefore the highest property taxes. But he noted that a more substantial share of households stand to gain.

“West Virginia has the lowest median home value in the country, but nearly a third of homeowners there could benefit from the new cap,” he said. “Benefits vary so widely because the mix of home values, property taxes, and income taxes looks very different depending on where you live. In states with both high home values and high taxes, most homeowners are now able to deduct more than they could under the old $10,000 cap. In lower-tax states—or states with no income tax—the impact is smaller, even for people with expensive homes.”

Only 1% of homeowner households in Tennessee and Nevada stand to benefit from new cap

Highlighting the extreme variability among states, only 1% of homeowners in Tennessee stand to benefit from the increased SALT cap—the lowest of any state.

The next lowest shares are in Nevada (1.2%), Wyoming (2.2%), South Dakota (2.8%) and Alaska (3.3%). The common thread between the bottom five states is the lack of a state income tax, while Tennessee, Nevada and Wyoming also have among the lowest median property taxes.

Khan noted that the share of homeowners who could benefit from the new cap may be considerably higher in some states due to the impact of state and local sales taxes, which are not accounted for in this analysis. 

The typical Nassau County, NY homeowner impacted by the new cap will save $7,200  annually—highest among U.S. metros

The typical Nassau County, NY homeowner impacted by the increased SALT cap will save $7,200 annually—the most in any of the top 100 U.S. metro areas and the highest savings possible, as it represents the maximum deduction of $40,000.

Next came San Francisco ($6,843), San Jose ($6,661), New York ($5,473) and Oakland ($5,455).

Khan said while many coastal metros have a high share of impacted homeowners, the potential tax savings are small relative to home values. In contrast, homeowners in Midwest metros like Cleveland, Indianapolis, Chicago and Pittsburgh are expected to see much bigger returns, relative to home prices.

In comparison, the typical homeowner impacted by the new cap in Knoxville, TN will save $777 per year—lowest among the top 100 metros.

Nashville homeowners impacted by the new cap will save the second-lowest amount each year ($1,017), followed by Little Rock, AR ($1,199), Las Vegas ($1,224) and Virginia Beach, VA ($1,345).

Nassau County has the highest share of homeowners who will benefit from the new SALT cap among U.S. metros

Nearly all (96.1%) of homeowner households in Nassau County stand to benefit from the increased SALT cap if they itemize their deductions—the highest share among the top 100 U.S. metro areas.

Next came California’s Bay Area metros—San Francisco (94.9%), Oakland (93.5%) and San Jose (92.5%)—followed by Elgin, IL (89.6%).

At the other end of the spectrum, only 0.6% of homeowner households in Knoxville, TN are expected to benefit from the increased SALT cap—the lowest share among the top 100 metro areas.

Next came Lakeland, FL (0.8%), Las Vegas (0.9%), McAllen, TX (1.4%) and Nashville, TN (2.1%)—all metros in states with no income tax.

State Table: Projected Impact of Raised SALT Cap

Metro Table: Projected Impact of Raised SALT Cap

Top 100 U.S. Metro Areas

Methodology

Please note: 

• This analysis only examines property and income taxes—it does not explore the potential impact of local sales taxes, due to the high variability across different jurisdictions.
• The analysis estimates the share and amount of benefit to households who could benefit from the SALT cap increase assuming they itemize their deductions. Many households with SALT liabilities above $10,000 may not itemize if their total deductions—such as SALT, mortgage interest, and charitable contributions—do not exceed the standard deduction for which they are eligible. 
  • For example: A household with a $15,000 SALT liability, $5,000 in deductible charitable contributions, and $20,000 in mortgage interest could deduct $40,000–an amount well above the $30,000 standard deduction for a married couple filing jointly. However, a similar household without a mortgage would only be able to deduct $20,000. The circumstances under which a household should itemize deductions are complex and should be determined with consultation from a tax professional.  

To estimate the share of homeowner households who stand to benefit from the increased SALT deduction cap we performed the following calculations for each state and metro area:

1. Estimate the property tax rate for each jurisdiction using 2023 ACS Census data on median home values and median property taxes paid by owner-occupied households.
2. Estimate the typical relationship between a household’s property tax liability and their total state and local income taxes in each jurisdiction based on aggregate revenue data on the average split between residential property and income taxes. 
   1. For example: If a homeowner’s property tax liability is estimated at $10,000  and 33% of SALT revenue in their jurisdiction comes from residential property taxes, we expect the household to pay $20,000 in state and local income taxes.
   2. Aggregate data on state and local government revenue from personal income taxes and property taxes come from the Census’s 2023 Annual Survey of State and Local Government Finances (ALFIN). Because the 2023 ALFIN survey does not distinguish between property taxes collected between residential and commercial properties, we estimate the share collected from residential property using state-level shares from a Tax Foundation analysis of previous years’ data.
   3. Calculate the share of homeowner households in a jurisdiction that are expected to pay more than $10,000 (the old SALT cap) in property taxes and state/local income taxes combined, using 2023 ACS Census data on the number of owner-occupied households by property value and the estimated relationship between property and SALT taxes.

To estimate the potential savings for homeowner households who stand to benefit from the increased SALT deduction cap, we:

1. Estimate the minimum property value threshold for each jurisdiction above which a homeowner would be expected to have a SALT liability of at least $10,000.
2. Identify the median impacted household’s SALT liability for each jurisdiction using ACS Public Use Microdata (PUMS) to calculate the median home value above the minimum threshold estimated above. 
3. Calculate the difference between the median deduction and the old SALT cap of $10,000.
4. Apply a 24% marginal tax rate (which corresponds to incomes roughly between $100-200k for individual filers, and $200-400k for married joint filers) to the portion that exceeds the cap 
   1. For example, if a typical household deducts $30,000, we apply the 24% rate against the $20,000 portion above the old $10,000 cap—meaning the savings would be $4,800.