For many high-net-worth individuals, the annual question of whether to itemize or take the standard deduction has become increasingly complex since the 2017 tax law. With the new tax bill, signed into law in July 2025, the debate has been reshaped entirely, especially for homeowners in high-tax states. At Lightening the Load, we understand that a one-size-fits-all approach to tax strategy doesn’t work for you. We are your steadfast partners, here to provide the clarity you need to make the right decision.
Understanding the New Rules of the Game
The new tax bill is a game-changer because it directly addresses the State and Local Tax (SALT) deduction cap, a provision of the 2017 law that significantly impacted many taxpayers.
The new, temporary change increases the SALT deduction cap from $10,000 to $40,000 for single and married filers. This is a significant shift that will be in effect through 2029, with a gradual phase-out for those with modified adjusted gross income above $500,000. For context, the standard deduction for the 2025 tax year is $15,750 for single filers and $31,500 for married couples filing jointly.
How the New SALT Cap Changes Everything for Homeowners
Before this new legislation, homeowners in high-tax states often found that their combined property and state income taxes quickly exceeded the $10,000 SALT cap. This left them with a total of itemized deductions that was often less than the standard deduction, making itemizing a non-starter.
The new $40,000 cap fundamentally changes this math. For many high-net-worth individuals, the higher cap means their property taxes and state income taxes alone may now be enough to make itemizing a more advantageous strategy. When you add other common itemized deductions to the equation, such as:
- Mortgage Interest: The new law makes the $750,000 mortgage interest deduction cap permanent. For those with mortgages below this threshold, every dollar of interest paid adds to their potential itemized deduction total.
- Charitable Contributions: Significant donations to charities can be a major component of a high-income individual’s itemized deductions.
- Medical Expenses: While subject to an income threshold, large, uninsured medical expenses can also contribute to your total.
When these deductions are combined with the new, higher SALT cap, the total may easily exceed the standard deduction. This can result in a lower overall tax liability and greater tax savings.
Don’t Guess, Get a Professional Analysis
The decision to itemize is no longer a simple one. The new tax bill, with its temporary provisions and phased-out benefits, requires a careful, personalized analysis. The right choice depends on your specific circumstances, including your income, home value, and state of residence.
Don’t guess on your filing strategy. Let us run the numbers to see if itemizing still works for you under the new rules. Schedule your consultation today!
Let us lighten your load.
