Beginning with the 2025 tax year, a new federal law significantly increases the cap on state and local tax (SALT) deductions from $10,000 to $40,000 for taxpayers earning under $500,000 annually. The higher deduction limit will remain in effect through 2029, gradually adjusting upward by 1% each year before reverting to $10,000 in 2030.

For California homeowners this change provides meaningful tax relief. In high-cost areas like the Bay Area where property taxes frequently exceed $10,000, many households will now be able to deduct the full amount of their property taxes on their federal returns.

There are many other tax deductible items to consider including mortgage interest credit, home improvements, EV charging equipment, renovations for medical needs and more!

If you’d like to better understand how this change could impact your situation, I’m happy to connect you with a trusted tax professional who can provide personalized guidance.