Higher SALT Caps, Lost Credits: How the 2025 Tax Law Affects Deed Holders

On the Fourth of July, 2025, Donald Trump signed the “Largest Tax Cuts in History” into law. California’s governor calls the law a plan for the ultra-rich. And yes, as SmartAsset.com points out, independent analyses show most of the new tax cuts will benefit those who already enjoy high incomes.

Many changes begin with the 2025 tax year, so they’ll show up in tax returns filed in the coming weeks. Will anything in the new tax law affect the typical deed holder? Let’s check into this.

The Wealthy Win Most

The new tax law lowers the tax rate on income from pass-through businesses (like many LLCs). Yet over 88% of the tax benefit for pass-throughs will boost the wealthiest households. High earners could avoid so much in taxes over the coming years that funding for Social Security and Medicare could be in jeopardy, SmartAsset reports.

Wealthy households will continue to enjoy their estate and gift exemptions. At the same time, for the majority of people, estate tax thresholds don’t make a difference, so most get no advantage in this area. And the amount wealthy families may leave tax-free to their heirs keeps going up. The estate and gift tax exemption for the 2025 tax year is $13.99 million. It rises to $15 million per taxpayer in 2026.

The Institute on Taxation and Economic Policy (ITEP) finds that the bottom 20% of earners will receive only 1% of all 2026 tax cuts. The wealthiest fifth, in contrast, will get 68%! The very richest households in the country — the top 5% — will end up with 44% of the cuts.

A few taxpayers with modest incomes will see some boosts. People who earn tips or overtime receive specific breaks. Those with car loans, and adults aged 65+, should check the new provisions that benefit them. Unfortunately, those receiving solar and clean-energy tax credits from the prior administration have lost those, from December 31, 2025. On the other side of the coin, private mortgage insurance (PMI) will become deductible as mortgage interest starting in 2026.

Some small business owners may receive breaks. For example, there’s the 20% qualified business income (QBI) deduction. This allows taxpayers to discount their U.S. business income. The break applies to sole proprietorships and partnerships, S corporations, estates and trusts. There are multiple restrictions, based on business type. Fortunately, most tax software can deduct QBI automatically.

Borrowers who put less than 20% down on their homes typically pay “PMI” every month. Learn about private mortgage insurance with Deeds.com.

Some Filers Will Benefit From the Higher SALT Cap

One key discussion point is the higher state and local tax (SALT) deduction. This allows filers to take discounts for their state and local income taxes, as well as the property taxes and sales taxes they pay throughout the year. You’ll be least likely to benefit from the SALT tax increase if you live in a place without state income tax and if your property taxes are relatively low.

On the other hand, residents of high-tax states will now enjoy higher deductions on their federal tax returns with the new cap. For the 2025-2029 tax years, the SALT deduction cap goes up to $20,000 for single filers and $40,000 for couples earning up to $250K ($500K joint).

The majority of Massachusetts households can save money due to the increased SALT cap. But only 1% of Tennessee or Nevada households will get savings. Very few homeowners in Wyoming, South Dakota, Alaska, Florida, or Texas stand to benefit significantly from the increased SALT cap. Nevada, Tennessee and New Hampshire households could get a little over $1K. Unless their property taxes exceed $10,000 (the prior cap), there’s no benefit to the increased cap.

Yet a third of homeowners in West Virginia could receive savings, even though it’s the U.S. state with the lowest median home value.

Not surprisingly, states with the highest portions of deed holders who reap rewards from the raised SALT cap also have high property values. That would be in Massachusetts, New Jersey, Connecticut, Oregon, New York, and California. That said, homeowners in Illinois, Indiana, Ohio, and Pennsylvania could get the most gains relative to their property values — but only if they itemize deductions.

The typical New York household will save the most: just over $7K a year, according to a Redfin analysis.

Mortgage borrowers are more likely to receive savings, because many of them itemize their loan interest as deductions. (The cap of $375K for a taxpayer’s allowable mortgage interest deduction continues in the new law.)

To Itemize, or Not to Itemize? That Is the Question

The raised SALT deduction cap will only help taxpayers who itemize their tax deductions. This is a key point. Asad Khan, senior economist at Redfin, notes that relatively few tax filers will actually find the increased cap helpful. Many people simply won’t be itemizing their tax deductions. This is because the standard deduction has gone up:

• In 2025, the standard deduction is $15,000 for a single filer or a married taxpayer filing separately. Joint filers get a standard deduction of $30,000.

• For 2026 tax returns, the standard deduction rises to $15,750 for single filers. It’ll be $31,500 for couples filing jointly.

Note that the interest a borrower pays on a home equity loan continues to be excluded from the allowable “qualified residence interest”—meaning it’s not deductible. You’re invited to learn more about that mortgage interest deduction with Deeds.com. Just be sure to double-check the figures on the IRS website each year. Key publications for a deed holder to review before filling out returns are:

• Publication 936 – Home Mortgage Interest Deduction.

• Publication 587, Business Use of Your Home.

• Publication 527, Residential Rental Property (for any deed holder who rents some of their property to others).

Who You Gonna Call? Tax Expert!

Whether to itemize deductions is not always an easy call. Deeds.com doesn’t provide case-specific advice and isn’t your tax professional. So, as always, consult your own financial planner, accountant, or tax adviser for guidance.

This is not a comprehensive rundown of all changes in the tax code. We’ve focused mainly on what will most likely impact deed holders.