What the New SALT Deduction Cap Means for Seattle Homeowners

A major tax change was signed into law in July 2025, and it could have meaningful implications for homeowners in Seattle and across Washington. The State and Local Tax (SALT) deduction cap, which had been set at $10,000 since 2017, has now been temporarily raised to $40,000.

This change takes effect for the 2025 tax year (the returns you'll file in spring 2026) and will remain in place through tax year 2029. In 2030, the cap is scheduled to revert back to $10,000.

Quick recap: What is the SALT deduction?

The SALT deduction lets taxpayers deduct certain state and local taxes from their federal taxable income. These may include:

• Property taxes
• State or local income taxes (not applicable in Washington, since we don't have a state income tax)
• State and local sales taxes (in place of income tax, if itemized)

For many Seattle-area homeowners, property taxes are the key factor. Depending on location, annual property taxes can easily reach $6,000–$12,000 or more.

How the new cap works

• Raised cap: The maximum deduction is now $40,000 per year, up from $10,000.
• Income phaseouts: The full benefit phases out for individuals with modified adjusted gross income (MAGI) above $500,000 ($250,000 for married filing separately). At $600,000+ income, the SALT deduction phases out completely.
• Temporary change: The $40,000 cap applies to tax years 2025–2029, then drops back to $10,000 beginning in 2030.

What this means for Seattle homeowners

• More may choose to itemize. Many taxpayers who previously took the standard deduction may now benefit from itemizing, especially if they own a home with significant property taxes and mortgage interest.
• Potentially greater tax savings for higher-value homes. Buyers considering higher-priced homes may find ownership costs offset by larger deductions.
• Adds weight to the long-term planning conversation. If you're thinking about buying or selling in the next few years, it's worth considering how this window (2025–2029) could affect your financial picture.

An example

A Seattle homeowner with $12,000 in property taxes and $15,000 in mortgage interest could now deduct the full $27,000, whereas under the old $10,000 SALT cap, only part of those taxes were deductible. That difference could make itemizing more worthwhile.

Bottom line

While Washington homeowners don't pay state income tax, our property taxes still matter — and this expanded SALT deduction can make a difference, particularly for those in higher-value homes.

If you're considering buying or selling in the next few years, understanding how these changes affect your financial picture is important. I recommend discussing these changes with your CPA or tax advisor to explore your specific situation and help you plan strategically.

Ready to start exploring how these tax benefits could work with your homeownership goals? Let's connect to discuss what this means for your specific situation and timeline.

This article is for informational purposes only and should not be considered tax or financial advice. Tax laws are complex and individual circumstances vary. Please consult with a qualified tax professional or CPA regarding your specific situation.