President Trump’s tax cuts are delivering bigger refunds and smaller tax bills to high-income Democratic-leaning regions that didn’t vote for him.
Millions of taxpayers—largely those who earn between $150,000 and $600,000—are starting to reap the benefits of a change that lets them deduct far more of their state and local taxes, or SALT, from their federal taxable income. In last year’s tax law, Congress raised the cap for that deduction to $40,000 from $10,000.
That means people with high state income taxes and local property taxes can pay less to the federal government, and those people are concentrated in such states as New York, New Jersey and California.
So far this tax season, refunds for people in some higher-tax states have been growing faster than the national average, according to an analysis by Navy Federal Credit Union of member deposits.
Doris Christelis, a 62-year-old retiree in Sudbury, Mass., who identifies as “blue from a blue state,” is among those benefiting from the higher SALT cap. She said she can now deduct the nearly $24,000 that she and her husband pay in property taxes.
“I felt like it was a gift for having to put up with Trump,” she said.
The Trump administration backed the higher cap but isn’t highlighting it much during tax season. Instead, officials trumpet the new tax breaks for overtime pay, seniors and tipped workers.
Those matter to millions of people. But in dollars, SALT is the biggest new tax break for individuals and is expected to save taxpayers about $29 billion as they file returns this year. That is about as much as the overtime and tips deductions combined, according to a Piper Sandler analysis.
Kenneth Green, a 75-year-old higher-education consultant in Los Angeles, was able to deduct nearly $40,000 because of his state income taxes and the $13,000 he pays in property taxes.
That doesn’t necessarily make him a fan of Trump’s tax law, which included new tax breaks for middle-income Americans and extended expiring tax cuts that help high-income taxpayers. “It’s still clear that the beneficiaries of the Big, Beautiful Bill are folks whose incomes are way above mine,” Green said.
He will probably contribute part of his tax savings to a 529 college savings account for his granddaughter.
“It’s not the time to buy an airline ticket to go to Europe because of the cost of oil,” Green said.
Many Republicans would prefer to eliminate the SALT deduction, arguing that it is an unnecessary federal subsidy for big-spending state governments. But Republican control of the House is narrow, which allowed a handful of lawmakers—particularly those from the New York metropolitan area—to hold out for the higher cap.
The $40,000 SALT limit applies to married couples and singles alike. It is available only to those who itemize deductions, generally people with enough state and local taxes, mortgage interest and charitable contributions to exceed the standard deduction, which is $15,750 for individuals and $31,500 for married couples for this tax filing season. People can deduct property taxes and their state and local income or sales taxes.
The cap shrinks once income reaches $500,000 and is $10,000 for anyone with income of $600,000 or above. In many states, some business owners can use workarounds blessed by the federal government so that, in effect, they have no cap on deducting taxes on business income.
Trump and the Republicans created the $10,000 cap in their 2017 tax law, and it fueled frustration in high-tax states. Last year’s relaxation of the limit is a relief to taxpayers who have been consistently hitting that ceiling, though the cap reverts to $10,000 after 2029 unless Congress acts.
The higher SALT cap prevented Jorge Valladares Jr. of Newbury Park, Calif., from needing to write a check to the federal government. The retiree’s income increased to about $156,000 from $143,000, more than expected because of higher Social Security payments and required retirement-account distributions.
But an additional $5,000 in SALT deductions and the new deduction for senior citizens meant he and his wife got a $468 refund.
“I was very pleased with this tax bill, as you can imagine,” Valladares said. “It’s helping middle-class people.”
Some taxpayers made changes in 2025 to turbocharge the SALT break. Bunching deductions into one year helps people exceed the standard deduction. That opens the door for other potential itemized deductions like mortgage interest and charitable contributions.
Patrick Russell, a 37-year-old commercial banker in Austin, Texas, paid two years of property taxes last year. Combined with his family’s sales-tax deduction, including for a Tesla they bought, he was able to take $27,000 in SALT deductions.
With mortgage interest and charity, his household’s itemized deductions rose to almost $38,000. The higher SALT cap played into his decision to take out a second mortgage to finance a large backyard project, adding a sauna, an outdoor kitchen and garden. “That interest will be deductible,” he said.
Dan Rahman, a 69-year-old retired emergency-room physician in New York City, figures his refund was about $4,000 bigger this year because of the higher SALT cap. He isn’t planning any splurges.
“I’m saving it to pay for the increasing costs of living: home insurance, the electric bill, groceries,” he said. “No wild trips.”
Original article found on MSN
