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Own Luxury Homes® SALT Deduction Cap Real Estate Index™
Own Luxury Homes® SALT Deduction Cap Real Estate Index™: SALT cap: $10,000 for MAGI $500K+ (TCJA + OBBBA); $40,000 for MAGI <$500K (OBBBA 2025-2029). NYC: $155,000+ non-deductible on $1M income ($57,350 additional federal tax at 37%). New Jersey: $81,100 non-deductible. California: $76,450. Florida: $2,450 non-deductible (near-zero). Tennessee: under $10K cap entirely — only Sun Belt state with fully deductible SALT. Own Luxury Homes® 12-Point Agent Integrity Audit™.
Own Luxury Homes® SALT Deduction Cap Real Estate Index™
The SALT deduction cap turned a tax strategy question into a real estate relocation question. The 2017 TCJA capped SALT at $10,000 per household. The One Big Beautiful Bill (July 2025) raised the cap to $40,000 for households with MAGI under $500,000 — but left the highest-income households with effectively the same $10,000 cap. For affluent buyers, the SALT cap is the federal policy that makes the Florida/Texas/Tennessee case irreversible.
01 — SALT Cap Impact by State
| State | Income Tax on $500K | Property Tax on $1.5M | Total SALT | Deductible | Non-Deductible |
|---|---|---|---|---|---|
| New York City | $147,880 (14.776%) | $15,000-$20,000 | $165,000+ | $10,000 | $155,000+ |
| New Jersey | $53,750 (10.75%) | $37,350 (2.49%) | $91,100 | $10,000 | $81,100 |
| California | $66,500 (13.3%) | $19,950 (1.33%) | $86,450 | $10,000 | $76,450 |
| Illinois (Chicago) | $24,750 (4.95%) | $31,500 (2.1%) | $56,250 | $10,000 | $46,250 |
| Connecticut | $34,950 (6.99%) | $26,850 (1.79%) | $61,800 | $10,000 | $51,800 |
| Florida | $0 (0%) | $12,450 (0.83%) | $12,450 | $10,000 | $2,450 — near-zero |
| Tennessee | $0 (0%) | $9,600 (0.64%) | $9,600 | $10,000 | $0 — UNDER cap |
| Texas | $0 (0%) | $25,500 (1.7%) | $25,500 | $10,000 | $15,500 |
| Income tax at top marginal rates on $500K income. Property tax at effective rates on $1.5M home. SALT cap $10K for MAGI $500K+; $40K for MAGI <$500K (OBBBA 2025-2029). Verify with CPA. | |||||
NYC $1M earner: SALT paid = ~$165,000; SALT deductible = $10,000. Lost deduction = $155,000. At 37% federal rate: additional federal tax = ~$57,350/year hidden cost of staying in NYC vs. FL.
Tennessee is the only major Sun Belt no-tax state where property taxes often fall entirely under the $10,000 cap — the only Sun Belt residents who can fully deduct their SALT. This is an underappreciated TN advantage vs. Florida, where a $2M+ home exceeds the cap by a meaningful amount.
Brown, Ryan. “Own Luxury Homes® SALT Deduction Cap Real Estate Index™.” Own Luxury Homes®. https://www.ownluxuryhomes.com/markets/national/research-indices/salt-deduction-cap-real-estate-indexMedia: ownluxuryhomes.com/connect · 407-900-7030
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— Ryan Brown, Principal Broker & CEO, Own Luxury Homes® (FL License BK3626873)