Here’s how much Nevada homeowners could save from Trump’s SALT cap

Nevada has one of the lowest potential benefits for the state and local (SALT) deduction cap in the country, according to a new report.

The typical homeowner in the state could potentially get back $1,090 (the median annual savings), and only two states, Alaska ($1,052) and South Dakota ($1,033) would get less, according to a new report from Redfin.

President Donald Trump included the SALT deduction as part of his “One Big Beautiful Bill Act” and the provision is for taxpayers to reduce their federally taxable income by avoiding double taxation in some cases. The act was first introduced in 2017 and Trump increased eligibility this year.

The cap allows homeowners who itemize tax breaks to potentially deduct up to $40,000 from federal taxes for state and local income taxes plus property and sales taxes. The Redfin report noted that using home values, income and local tax data that the share of homeowners in Nevada that would benefit from the new rules is approximately 1.2 percent, if “they choose to itemize their deductions—meaning they could deduct more than $10,000 (the old cap) in combined property, and state and local income taxes.”

States with high state and local taxes usually see the biggest number of taxpayers using the deduction. Redfin’s report estimates that in New York, the average homeowner could save $7,092 a year, the highest in the country. This by far beats out the second state, California ($3,995).

Chen Zhao, who leads Redfin’s economics team, said Nevada has a historically low tax burden compared to such states as New York, which has one of the highest in the country, hence the lower deduction rate here.

“The difference is driven by home prices, property tax rates, income levels, and income tax rates. Nevada is lower than New York on all of these,” she said. “The median (home) sale price in Nevada is currently $469,000 versus $582,000 in New York.”

The Redfin report also estimates that the median taxpayer in Nevada could potentially get $14,540 back through the deduction assuming a 24 percent marginal tax rate on the amount above the old cap of $10,000. Zhao said this all comes down to how expensive it is to live in one state compared to another.

“Nevada also has one of the lowest property tax rates in the country, while New York’s is several times higher depending on which county the house is in. Median income in Nevada is also lower than in New York, but the real difference on income taxes is that Nevada doesn’t have a local income tax whereas New York has one of the highest income tax rates in the country. The combination of all of these means that Nevada residents are much less likely to be affected by the SALT cap and therefore, less likely to benefit from the increase in the SALT cap.”

Contact Patrick Blennerhassett at pblennerhassett@reviewjournal.com.