This Is How Much Bigger Your Tax Refund Will Be After New SALT Deductions
Written by
Chris Adam
Edited by
Rebekah Evans
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According to Ruth White, former IRS auditor co-founder of White Sands Tax Services, around 90% of taxpayers used the standard deduction in 2024. White expects that to change significantly for 2025 filings, thanks in part to a revision in the tax code.
“While preparing 2025 filings, I’ve seen that my middle-class clients earned a minimum of $10,000 to $20,000 more in 2025 but owed less income tax due to this State and Local Tax (SALT) revision in the tax code,” White said.
The SALT deduction cap rose from $10,000 to $40,000 starting in 2025 under the One Big Beautiful Bill Act (OBBBA). According to tax pros who spoke to GOBankingRates, this allows larger itemized deductions and larger refunds for some high-tax state filers who had previously hit the limit. While it may especially benefit some taxpayers in states where income and property taxes often exceed the old cap, many consumers across the country may potentially see thousands of dollars more in their tax refunds with this change. Find out more about this deduction below.
Three Questions To Ask Yourself
When it comes to how this impacts your refund, it really depends on a number of things, according to Lawron Ballard, certified public accountant (CPA) and founder of Hill Town Advisors.
First: Is it more advantageous to itemize or take the standard deduction?
“Yes, the SALT threshold has gone back up, but the standard deduction is also increasing,” Lawron explained. “For my clients who are homeowners in California, it’s almost guaranteed to make a significant difference. But for my clients in low-tax or no tax states like Florida and Texas, you may find it doesn’t make as much of a difference as you think.”
Second: How much money did you make?
If you make over $600,000 ($300,000 if you’re married filing separately), there is no change in the SALT deduction for you, which is something Lawron said to keep in mind.
Third: Have you made any payments during the year?
“A common misconception is that refunds are free money,” Lawton said. “While credits exist for low-income earners and families with children, the majority of the time the way you get a refund is by paying in. So if you’re self-employed, even with the increased SALT deductions, you may not see a change.”
Housing Finances To Consider
Per Annette Nellen, CPA and professor of accounting and taxation at San Jose State University, “Some people without a mortgage interest deduction or much charitable contributions may still find that the standard deduction is greater than their itemized deductions even with the SALT cap raised to $40,000 because they don’t have that much state and local taxes.”
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