With the 2025 tax law changes, property owners now face a unique planning opportunity. Here’s what you need to know:
Bigger Cap — But Temporary
• The SALT deduction cap rises from $10,000 in 2025 to $40,000 (indexed annually) beginning in 2026.
• However, high-income taxpayers face phase-outs: the larger deduction begins to shrink for married couples with MAGI over $500,000 ($250,000 if filing separately), and phases down until only $10,000 remains allowed.
Planning Options
• Prepay in 2025: If allowed in your county, you could prepay 2026 property taxes before year-end 2025 to capture the higher deduction cap while it’s fully available.
• Wait Until 2026: If your income will be higher then (and under the phase-out thresholds), waiting may provide greater benefit.
• Bunch Deductions: A powerful option is to pay two years of property taxes in one year (e.g., 2025 and 2026 together), then skip paying the following year until due. This bunching strategy allows you to:
– Maximize the deduction in one year by stacking payments under the expanded cap.
– Alternate between high-deduction years and lower-deduction years, smoothing out your tax liability over time.
– Pair bunching with charitable contributions for even greater impact.
Why This Matters
The expanded SALT deduction is a short-term opportunity with income-based limits. Careful timing—whether paying early, waiting, or bunching—can make the difference between a $10,000 deduction and a $40,000 deduction.
Next Step
Every taxpayer’s situation is different. Your income forecasts, property tax cycle, and charitable giving plans all factor into the best approach.
Call us today to schedule your 2025 year-end tax planning session. Our team at theKFORDgroup will help you model these strategies so you can decide whether to prepay, wait, or bunch to maximize your deduction, minimize your taxes, and keep more money in your pocket.