SALT cap raised to 40,000 will benefit California homeowners, experts say

The Senate's approval to raise the SALT tax deduction to $40,000 could provide substantial financial relief for California homeowners and prospective buyers. This adjustment allows residents to better deduct state and property taxes on their federal tax returns. Darien Shanske, a law professor at UC Davis, emphasized that this change benefits high earners who itemize their deductions, helping those who earn between $100,000 and $500,000. David Stark from the Bay East Association of Realtors called the adjustment a potential game-changer for homeownership financing. Alan Auerbach, an economist at UC Berkeley, noted that affluent Californians would be among the primary beneficiaries due to the state's high tax rates.

However, he cautioned that other components of the bill, such as Medicaid cuts, could diminish the overall advantages of this tax break. The SALT deduction changes will impact taxpayers when they file their 2025 returns. Ultimately, the bill's full implications remain to be seen as it progresses through legislative discussions.