5 states, 10 cities would benefit the most by a SALT cap hike

Republicans on the House Budget Committee are meeting with their members today to try to come up with changes to the tax portion of the one big beautiful bill (OBBB) that they want to pass to further the White House’s fiscal and immigration goals.

Conservative GOP members tanked the tax plan on Friday, complaining that it added to the federal deficit. Fiscal conservatives are holding out for deeper spending cuts or more reductions to tax benefits for low-income households.

Meanwhile, another group of Representatives, this one bipartisan by led by Republicans who represent districts with high housing costs, could cause problems for the bill. They are not happy with what they say is insufficient relief in the tax bill for the federal deduction of state and local taxes (SALT).

The Tax Cuts and Jobs Act of 2017 set a $10,000 cap on SALT amounts that can be claimed as itemized deductions. The tax bill proposes to increase that to $30,000 for taxpayers, both single and married filing jointly filers, who make less than $400,000.

UPDATE, May 21, 2025: This morning, House Speaker Mike Johnson said Republicans have reached an agreement to increase the SALT federal itemized tax deduction to $40,000. The cap is the same for both individual taxpayers and married couples filing jointly, and would phase out for annual incomes greater than $500,000. However, the income phaseout threshold reportedly would increase by 1 percent a year over a decade. 

Although the GOP-controlled Ways and Means Committee approved tripling the SALT limit, some party members not on the tax-writing panel still aren’t happy with the amount. They are threatening to vote against the bill when it reaches the House floor if the amount isn’t increased.

While it’s true that easing the SALT cap would benefit wealthier taxpayers who own higher priced homes. Their now partially-deductible property tax bills are based on their residences’ values.

But home prices, and taxable values, have increased across much of the United States in recent years. And those homeowners, many of whom and not what most of us consider wealthy, are struggling to pay increased local real estate taxes. The inability to deduct all of those taxes has added to their frustration, and prompted their Congressional members to act.

Higher property tax areas: Lawmakers from both parties in high-tax states, such as New York, New Jersey, and California, obviously are looking to up the SALT limit.

But as we all know, taxes are personal. So, just who would benefit from an increased SALT deduction would largely depend on where they live and their current tax burden.

Realtor.com, however, has taken a closer look at where taxpayers would gain if they could deduct more than $10,000 of their SALT. An analysis by the real estate listings website pinpoints the top five states and 10 metro areas with the highest share of properties that exceed the current SALT cap.

The top five states whose residents would benefit most are California, Connecticut, Massachusetts, New Jersey, and New York. The table below shows the share of properties with tax bills of more than $10,000.

At the municipal level, Realtor.com found several cities in those five states also faced real estate tax bills of more than $10,000. But a few communities in what generally are viewed as lower tax states also made the list of 10 metros that would benefit the most with a SALT deduction increase.

Yep, number 8 on that list is I tend to gripe about my annual property tax bill.

And the combined lists five states and 10 metro areas that could benefit from a SALT cap increase make 15 this weekend’s By the Numbers figure.

Next tax legislative steps: GOP leaders have been meeting with their members on the House Budget Committee this weekend. The committee is scheduled to reconvene at 10 p.m. ET today to vote.

The official word is that they have made progress on changes that will get the committee’s approval so that the tax part of the OBBB can go before the full House next week for a vote.

UPDATED, Monday, May 19, 2025: House Republican deficit hawks allowed the bill, by a vote of 17-16, to move out of Budget Committee in an unusual late-night vote on Sunday, May 18. The four GOP holdouts who had tanked the vote on Friday, May 16, voted present last night so the measure could proceed. Speaker Mike Johnson (R-Louisiana) told reporters that Sunday’s vote was a “big win,” but acknowledged that there’s “a lot more work to do."

Even if they are enough for the tax package to clear the Budget panel, will they satisfy other Republicans, like those whose constituents want SALT changes, who are not pleased with the bill? The GOP's slim margin in the House means it can only lose two votes on the House floor if all members are present and voting.

Remember, too, that the House votes are just the beginning of the process. Once the OBBB finally clears that chamber, it will go to the Senate. Lawmakers on that side of Capitol Hill already have said they plan to make their changes.

So, as the old saying goes, stay tuned.

You also might find these items of interest:

• SALT could stall GOP’s comprehensive tax bill
• Property taxes have increased in 48 of 50 largest U.S. cities
• 2nd W&M tax proposal includes popular, controversial, and costly provisions

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