Three States May See Bigger Tax Refunds Due to Trump SALT Change

Taxpayers in New York, New Jersey, and California will benefit most from the increased SALT deduction cap.

Published on Feb. 22, 2026

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The Trump administration increased the state and local tax (SALT) deduction cap from $10,000 to $40,000, which will result in significantly larger tax refunds for residents of high-tax states like New York, New Jersey, and California this year. Taxpayers in these states could see their tax liabilities reduced by $1,000 to $3,000 on average, with some higher-income filers potentially saving up to $9,600.

Why it matters

The SALT deduction cap increase will provide $32.2 billion in tax savings across the country, but the biggest beneficiaries will be taxpayers in the high-tax states of New York, New Jersey, and California. This could help keep more residents in these states instead of migrating to lower-tax areas, though the change is currently only temporary.

The details

The One Big Beautiful Bill Act raised the SALT deduction cap from $10,000 to $40,000, allowing taxpayers in high-tax states to write off more of what they pay in state and local taxes. This will result in tax refunds being $1,000 to $3,000 higher on average, with some higher-income couples potentially saving up to $9,600. The full $40,000 deduction is available for all taxpayers earning up to $500,000, after which it begins to phase out, and those earning $600,000 or more can only claim a $10,000 deduction.

  • The SALT deduction cap increase was implemented as part of the One Big Beautiful Bill Act.
  • Tax refunds reflecting the higher SALT deduction cap will be issued during the 2026 tax filing season.

The players

Trump administration

The current presidential administration that implemented the increase in the SALT deduction cap.

New York, New Jersey, and California

High-tax states that will see the biggest benefits from the increased SALT deduction cap.

Kevin Thompson

The CEO of 9i Capital Group and host of the 9innings podcast, who commented on the SALT deduction changes.

Alex Beene

A financial literacy instructor at the University of Tennessee at Martin, who commented on the potential long-term effects of the SALT deduction cap increase.

Drew Powers

The founder of Illinois-based Powers Financial Group, who commented on which areas will benefit from the SALT deduction cap increase.

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What they’re saying

“As for Trump's role, SALT became a negotiating chip to get the OBBBA across the finish line before July 4th. Politics, not principle. Yes, many of these states didn't support him, but tax law is about votes and leverage, not loyalty. Long term, this is another reminder that tax policy is driven as much by power and strategy as it is by pure economics.”

— Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast (Newsweek)

“New York, New Jersey, and California are three states with high tax rates on both income and property. Other states and urban areas, the greater Chicago metro area for one, will also benefit from the increased cap. This benefits not only higher income earners who are not phased out of the deduction, but also lower income earners who have seen their property values, and therefore their property tax bills, skyrocket in recent years.”

— Drew Powers, Founder of Powers Financial Group (Newsweek)

“A family in New Jersey or New York paying $35,000 in SALT might see tens of thousands more in deductions, translating into thousands of dollars in extra refund or reduced tax owed.”

— Michael Ryan, Finance expert and founder of MichaelRyanMoney.com (Newsweek)

What’s next

Experts warn that the long-term implications of the higher SALT deduction cap are uncertain, as it could reduce federal revenue and lead to pressure to end the higher cap sooner or resist making it permanent if the economy weakens or deficits worsen.

The takeaway

The increase in the SALT deduction cap will provide a significant tax benefit to residents of high-tax states like New York, New Jersey, and California, potentially keeping more people from migrating to lower-tax areas. However, the long-term sustainability of this change remains uncertain as it could impact federal revenue and lead to political pressure to scale it back.