The 2025 SALT Deduction Update: What Texas Homeowners Should Know
If you live in Texas, you don’t pay state income tax — but you likely pay significant property taxes, which are part of the state and local tax (SALT) deduction on your federal return. For 2025, the rules around SALT deductions are changing, and this could affect your tax planning for the year ahead.
What’s Changing in 2025
For tax year 2025, the federal SALT deduction limit increases to:
$40,000 for married couples filing jointly
$20,000 for married filing separately
$10,000 for single filers
This expanded limit phases out once your modified adjusted gross income (MAGI) exceeds $500,000 for joint filers (half that for separate filers). The phaseout is gradual — as your income rises beyond the threshold, the enhanced deduction is reduced until it eventually reverts back to the $10,000 cap.
You can only benefit from SALT if you itemize deductions on Schedule A. The standard deduction also increases slightly in 2025, so some taxpayers may still find it more beneficial to take the standard deduction.
Why This Matters for Texans
Even without a state income tax, Texans often have high property tax bills. If your household pays substantial property taxes — and also has mortgage interest or charitable contributions — the higher 2025 SALT cap may make itemizing worthwhile again.
For example:
A married couple with $400,000 of income and $25,000 in property taxes could now deduct the full amount (rather than being limited to $10,000 under prior rules).
A couple with $550,000 of income would see their SALT deduction reduced under the phaseout but still benefit from more than the old $10,000 limit.
Planning Tips for 2025
Compare itemizing vs. standard deduction. Add up your 2025 property taxes, mortgage interest, and charitable gifts. If that total exceeds your standard deduction, itemizing may save you more.
Consider timing payments. If your local tax authority allows prepayment, paying your 2025 property taxes before year-end may help maximize deductions in a single year.
Review your income level. Because the higher SALT benefit begins phasing out above $500,000 MAGI, it can help to run a projection or adjust timing of income or deductions if you’re near that range.
Run the numbers early. The new limit may change whether itemizing makes sense — a quick projection with your CPA can show which option gives you the best result.
Key Takeaway
For many Texas homeowners, the higher 2025 SALT deduction offers a renewed opportunity to claim more of your property taxes on your federal return — especially if your income falls below the new phaseout thresholds. However, since the benefit depends on itemizing, it’s worth reviewing your 2025 deductions now to plan ahead.
