Warm Weather and Tax Deductions in New York
On June 4, 2025, New York City experienced an unusually warm day, with temperatures soaring into the 80s.
Recently, President Donald Trump’s “Big Beautiful Building” initiative temporarily raised the limits for state and local tax deductions, known as SALT, from $10,000 to $40,000. This change benefits residents in certain states significantly, as highlighted in a recent Redfin report.
Chen Zhao, who leads economic research at Redfin, remarked that the findings align with expectations, indicating notable advantages for specific states’ residents.
Insights on SALT Deductions
Trump’s 2017 tax reforms initially capped the SALT deduction at $10,000. Before 2018, there were no limits, allowing individuals to deduct real estate and state income taxes completely. However, some affluent homeowners found their earnings affected by the alternative minimum tax.
To take advantage of the SALT deduction, taxpayers must itemize their deductions instead of opting for the standard deduction. In 2022, only around 10% of filers itemized, largely comprised of higher earners, according to IRS statistics. That’s where taxpayers can notice the most significant gains from the $40,000 SALT deduction cap in 2025.
Top States for SALT Savings
The law’s temporary adjustment to the SALT deduction cap benefits individuals making under $500,000, with the cutoff increasing by 1% annually until 2029 and returning to the $10,000 limit by 2030. A Redfin report details which states could see the most savings:
- New York: $7,092
- California: $3,995
- New Jersey: $3,897
- Massachusetts: $3,835
- Connecticut: $3,133
Conversely, the states reaping the least from the new law are:
- South Dakota: $1,033
- Alaska: $1,052
- Nevada: $1,090
- Tennessee: $1,097
- New Hampshire: $1,101
To estimate potential savings, Redfin analyzed how much typical homeowners could deduct under the new SALT regulations, applying a 24% marginal tax rate against the previous $10,000 cap. It’s worth noting that these calculations are largely hypothetical, based on various property and state tax assumptions, and don’t account for local income taxes, which can vary significantly.
Other Analyses of SALT Tax Benefits
A separate report from the Bipartisan Policy Center, released in May, examined which states benefit most from the SALT deduction based on resident participation and overall deduction sizes. In states like Connecticut, New York, and California, the average SALT deduction for 2022 was nearly $10,000, while those in states like Wyoming and South Dakota reported the lowest averages.
This suggests that most filers are nearing the $10,000 limit, as observed by the researchers.
Additionally, the districts with the highest proportions of SALT claimants included Washington, D.C., and Maryland, while regions like West Virginia and South Dakota had the fewest claims. However, researchers acknowledged that neither of these measures perfectly reflects the true benefits derived from SALT deductions.
