Will I Be Itemizing My Tax Deductions Again?
The answer is maybe, and here is the most common reason why: the One Big Beautiful Bill Act (OBBBA), officially Public Law 119‑21 from H.R. 1, signed into law on July 4, 2025, increased the cap on State and Local Tax (SALT) deductions from $10,000 to $40,000 for taxpayers with income below $500,000 ($250,000 for married filing separately). This change means that taxpayers in states like Washington, with higher property, sales, and excise taxes, may now benefit more from itemizing than from taking the standard deduction.
SALT in Washington
Washington does not have a state income tax, but SALT includes:
- Property taxes
- Sales taxes on vehicles and major purchases
- Excise taxes
Example for Pierce County:
- Home worth $1,500,000 → estimated property taxes $14,700
- Vehicle purchase $60,000 → estimated sales tax $6,180
- Boat excise tax $150
- Total SALT: $21,030
Do You Qualify for the Higher SALT Deduction?
- You pay high enough property, sales, or excise taxes.
- You itemize your deductions instead of taking the standard deduction.
- Your income is below $500,000 ($250,000 for married filing separately).
Standard Deduction vs Itemized Deductions (2025)
| Filing Status | Standard Deduction | Example Itemized Deductions | Total Itemized |
|---|---|---|---|
| Single | $15,750 under 65 / $17,750 age 65+ | SALT $21,030, Charitable $5,000, Mortgage Interest $7,500 | $33,530 |
| Married Filing Jointly | $31,500 under 65 / $34,700 both 65+ | SALT $21,030, Charitable $5,000, Mortgage Interest $7,500 | $33,530 |
| Head of Household | $23,625 under 65 / $25,625 age 65+ | SALT $21,030, Charitable $5,000, Mortgage Interest $7,500 | $33,530 |
*Other categories such as medical and dental expenses, including mileage and premiums, can add additional value to your itemized deductions.
Practical Tips
- Keep a summarized file or spreadsheet of property taxes, large purchases, charitable contributions, and other deductible items.
- Avoid sending a shoebox of receipts to your tax preparer.
- If organizing expenses becomes overwhelming, consider a professional accounting service.
With 870 pages of new law, Washington residents with high property and sales taxes should review their records carefully. This can help determine whether itemizing may reduce taxable income more than the standard deduction. Stay tuned for more updates!