By Kimberly Hayek
Californians are about to get some tax relief.
The One Big Beautiful Bill Act, the new Republican tax-cut bill signed into law by President Donald Trump on July 4, raises the state and local tax (SALT) deduction cap from $10,000 to $40,000 for tax years 2025 through 2029, which should benefit Californians, who pay some of the highest state income and property taxes in the nation.
The cap will be increased by 1 percent annually until 2030, when the cap reverts back to $10,000. The cap’s increase is one part of an overarching tax relief package.
The SALT deduction means taxpayers can deduct state and local taxes, such as property and income taxes, from their federal taxable income.
The deduction had been capped by the 2017 Tax Cuts and Jobs Act at $10,000. The Tax Foundation says the new $40,000 cap helps middle-class households in expensive parts of California. In counties like Marin, San Mateo, Santa Clara, and San Francisco, where property taxes are high, SALT deductions exceeded $30,000 before 2017.
The Senate Committee on Finance in a statement said that the bill would ease tax burdens for families—in particular, those earning less than $500,000.
The bill also features tax relief beyond the standard deduction boost, including tax benefits for child care, no taxes on tips, no taxes on overtime, as well as tax relief for seniors.
The nonpartisan Joint Committee on Taxation in a distributional analysis concluded the largest proportional tax benefits go to nationwide workers and families making less than $50,000. Previously, the Joint Committee on Taxation concluded that the bill would result in more than $600 billion in new tax relief to middle-class households. The largest proportional tax benefits then go to workers and families making less than $50,000.
On a national level, the Joint Committee on Taxation concludes that the new tax relief would affect the following incomes as follows:
- Less than $15,000 – 16.4 percent cut
- $15,000-$30,000 – 27.1 percent cut
- $30,000-$40,000 – 9.5 percent cut
- $40,000-$50,000 – 7.2 percent cut
Rep. Kevin Kiley, a Republican representing California’s 3rd congressional district, celebrated the legislation.
“Californians will soon get something long overdue: major tax relief,” Kiley said in a statement on July 3. “That is the most immediate consequence of passing today’s legislation, which will benefit all Americans but especially Californians, because of an increase in the SALT deduction. Had the bill failed, Californians would have faced the largest tax increase in U.S. history, costing the average family thousands of dollars.”
Rep. Young Kim, a Republican serving California’s 40th congressional district, also praised the bill.
“This bill lowers taxes and provides relief to put money back in the pockets of everyday Americans,” she said.
Some Republicans, however, strongly opposed the SALT deduction.
“SALT deductions allow blue states to export their political mistakes (electing high tax crazy socialists),” Rep. Chip Roy (R-Texas) said in an X post on June 27. “Americans shouldn’t subsidize.”
