Caitlin Reilly (Bloomberg Law): SALT Break Sought by New York, California Pays Off Across the US
The expanded state and local tax deduction championed by New York lawmakers is gaining favor around the US, benefiting well-heeled taxpayers in states like Ohio, Colorado, North Carolina, Michigan and Pennsylvania.
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Some counties in Florida and states in the Mountain West also stand to benefit from the bigger tax break, an analysis by the conservative-leaning Tax Foundation found.
Appreciation in home values — rising fastest among higher-end residences that generate especially expensive property tax bills — has broadened use of the deduction outside high-income tax states along the Northeast Corridor and West Coast, tax and wealth advisers across the country said.
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That could build support for continuing the expanded break when it expires at the end of 2029, said Garrett Watson, vice president of federal tax policy of the Tax Foundation.
Higher-income taxpayers pay more in state and local income taxes and, because their homes are usually more valuable, tend to be hit with larger local property taxes. But the expanded break is of no use to the wealthiest Americans. The maximum SALT deduction — set at $40,400 this year — starts to phase down for households with more than $505,000 in annual income.
The value of luxury homes – those estimated to be in the top 5% of their metro area’s price range – rose more than 5% from a year earlier and 17% over the past three years, according to a recent Redfin analysis of US sales data. Median prices surged by double digits over the past year alone in hot Florida markets such as Tampa, Miami and West Palm Beach.
It will be years before the IRS releases data showing exactly how many taxpayers took advantage of the higher SALT deduction and their geographic locations. But analysis by the Tax Foundation showed some surprising winners, including counties in Florida, Georgia, Colorado, Idaho, Wyoming and Utah.
Residents of Miami-Dade County in Florida stand to receive nearly $260 million in collective tax savings from the larger SALT break in 2027, according to the analysis. Nearby Palm Beach should see a collective $321 million in tax savings. The results are all the more striking because Florida doesn’t have an income tax.
