American homeowners have recently been given a significant boost, thanks to new measures introduced in the One Big Beautiful Bill Act (OBBBA).
Signed into law by President Donald Trump on July 4, this legislation aims to provide financial relief for homeowners and families, with notable changes to tax deductions and housing incentives.
These provisions are poised to ease the financial burden on many Americans, particularly those in high-tax states, while also offering long-term benefits for homeownership.
The bill includes several major policies that will have an immediate and lasting impact on American households. Among these, the extension of mortgage interest deductions and the increase in the State and Local Tax (SALT) deduction cap stand out as key elements of relief.
With high housing costs and rising taxes in many states, these provisions promise to put more money back in the pockets of homeowners, making it easier to afford and maintain a home.
Raising the SALT Deduction Cap: A Lifeline for High-Tax States
One of the most significant changes under the OBBBA is the increase in the SALT deduction cap, which has been raised to $40,000 for the next five years. This is a substantial improvement over the previous $10,000 cap set by the Tax Cuts and Jobs Act of 2017.
The new provision, which targets homeowners in states like New York, California, and New Jersey, allows for a greater deduction of state and local taxes, ultimately reducing federal tax obligations for many families.
According to Jenna Stauffer, a real estate advisor with Sotheby’s International Realty, this increase offers homeowners in high-tax states “more breathing room.”
By lowering the overall federal tax burden, it not only keeps more money in people’s pockets but also mitigates the financial pressures that come with living in areas with high property and income taxes.
However, this provision will expire in 2030 unless renewed, at which point the cap will revert to $10,000, unless further legislative action is taken.
Mortgage Interest Deduction Extension: Predictability and Stability for Homeowners
Another important element of the OBBBA is the permanent extension of the home mortgage interest deduction. Under this provision, homeowners will continue to benefit from a deduction of mortgage interest on loans up to $750,000.
This policy is considered a core incentive for homeownership, providing stability for families looking to purchase a home and making it easier to plan long-term.
For many Americans, the ability to deduct mortgage interest plays a critical role in determining whether they can afford to buy a home. By keeping this deduction in place, the bill not only reinforces the value of homeownership but also provides predictability in the face of fluctuating housing markets and rising mortgage rates.
According to Stauffer, this measure is a “big deal” for prospective homeowners, offering them greater financial security when making such a significant investment.
