H.R.1—the One Big Beautiful Bill Act, enacted in July—included several of the National Association of REALTORS®’ top tax priorities. In an occasional series, REALTOR® Magazine is taking a deep dive into those tax reforms and what’s next for real estate professionals, homeowners and investors in real property.
One of the biggest NAR priorities for tax reform was an increase in the state and local tax (SALT) deduction limit.
Under H.R. 1, in the tax year 2025, the SALT limit quadruples from $10,000 to $40,000. However, the marriage penalty remains in place, meaning that the limit is the same, regardless of whether the taxpayer is filing an individual return or married couple filing jointly. In addition, for those with modified adjusted gross income of more than $500,000, the limit decreases by 30% of the excess of MAGI over that threshold until it drops to a minimum SALT deduction limit of $10,000. For example, a taxpayer with a MAGI of $550,000 would see the $40,000 limit reduced by 30% of $50,000, or $15,000. That taxpayer, therefore, would be able to deduct only up to $25,000 in state and local taxes.
For tax years 2026 through 2029, the SALT deduction limit and income threshold increase by 1% annually. So, in 2026 the limit is $40,400 and the income threshold is $505,000; in 2027 the limit is $40,804 and the income threshold is $510,050, and so on.
Benefits for Homeowners, Investors
The increase in SALT deductibility means that for this and the next four years, many more current and prospective homeowners will be able to receive federal tax benefits for owning and purchasing a home and will have lower taxes. The change will also greatly benefit many investors in real property, who will be able to deduct more of their property taxes.
“We worked for months to educate Congress on the problems of the SALT cap and on the need for other real estate provisions in the bill through original NAR research, analysis and polling,” says NAR Executive Vice President and Chief Advocacy Officer Shannon McGahn.
In a voter survey commissioned by the NAR in April, 61% of respondents supported increasing the state and local tax deduction or removing the limit altogether. The national survey of 1,000 registered voters was conducted by Public Opinion Strategies and Hart Research and had a margin of error of 3.1%.
"NAR had long supported full or expanded deductibility of state and local taxes," McGahn says. “Limiting or eliminating the SALT deduction effectively subjects homeowners to a form of unfair ‘double taxation’—paying federal tax on income that has already been spent on taxes at the state or local level.”
Advocacy on SALT Continues
In the 2030 tax year, unless Congress acts to extend the SALT deduction increase, the cap permanently reverts to $10,000.
“The new threshold covers the vast majority of the middle class, and while many tax provisions have sunsets, NAR will continue to work to educate Congress over the next four years to show the need for a robust SALT deduction,” McGahn says. “In our view, SALT relief was a vital step toward making homeownership more affordable, preserving real estate investment, and strengthening communities nationwide.”
“Over the past seven years, increased state and local taxes without a larger federal SALT deduction cap have put an even heavier tax burden on millions of middle-class homeowners, especially those living in higher-cost states,” says NAR Director of Federal Tax Policy Evan Liddiard. “Raising or eliminating the SALT cap has long been a priority for NAR, and we will continue to advocate for a more equitable federal tax policy that recognizes the realities faced by taxpayers in every region of the country.”
