🏡 Big News for California Buyers: The SALT Cap Just Increased to $40,000!

Andrew Georgitsis
6 days ago
2 min read

If you’ve been waiting for the right time to buy a home in California, today might be your moment. Congress has officially passed the “One Big Beautiful Bill,” raising the SALT (State and Local Tax) deduction cap from $10,000 to $40,000.

Here’s what that means for you as a California homebuyer:

What Is the SALT Cap, and Why Does It Matter?

The SALT cap limits how much you can deduct on your federal taxes for state and local property taxes and income taxes. For years, that cap was stuck at $10,000, hitting California homeowners especially hard.

Now, with the new law, the cap has been increased to $40,000 for the next five years, providing massive tax relief for many buyers and homeowners in California.

How This Helps You Buy a Home

✅ Lower After-Tax Homeownership Costs:With the higher deduction, you can save thousands each year, reducing your effective cost of homeownership.

✅ Increased Buying Power:With lower effective monthly costs, you may qualify for a better home or lock in a competitive property you couldn’t before.

✅ Frees Up Cash for Down Payments or Improvements:Tax savings can help you cover closing costs, buy down your rate, or furnish your new home.

Why Buying Now Makes Sense

The California real estate market is competitive, and this tax change is expected to increase buyer demand, especially in high-tax areas like Temecula, Murrieta, Oceanside, and coastal communities.

By acting now, you can:✔️ Lock in your purchase before prices increase due to new demand✔️ Position yourself to take advantage of the tax benefit immediately✔️ Move confidently into your next chapter with financial clarity

Who Benefits the Most?

Buyers looking to purchase in high-property-tax areas
First-time buyers who will now have lower effective payments
Move-up buyers seeking larger homes
Investors optimizing cash flow in high-tax counties

Example of Savings

Imagine you pay $25,000 in property and state taxes annually. Under the previous $10,000 cap, you could only deduct that much. Now, you can deduct the full $25,000 (up to $40,000), reducing your taxable income and potentially saving you thousands each year.