2026 Tax Refunds: How the SALT Deduction Change Could Boost Your Money

If you are an American taxpayer, there’s good news ahead. Many people could see bigger tax refunds when they file their 2025 taxes in 2026. This is thanks to a recent change in the law called the One Big Beautiful Bill Act, or OBBBA.

Let’s break down what this means, who benefits, and how you can make sure you get the most money back.

What is the One Big Beautiful Bill Act (OBBBA)?

The One Big Beautiful Bill Act is a new law that changes how taxes work in the United States. One important part of the law deals with the SALT deduction. SALT stands for State and Local Taxes, which includes things like income taxes, property taxes, and some sales taxes.

Before this new law, there was a limit on how much SALT you could deduct on your federal taxes. This meant that even if you paid a lot in state and local taxes, you couldn’t always use all of it to lower your federal tax bill.

Now, the law raises that limit, which means more people can deduct these taxes and potentially get bigger refunds.

What is the SALT Deduction?

The SALT deduction allows taxpayers to subtract state and local taxes they pay from their income when filing federal taxes. This reduces the amount of income that is taxed by the federal government.

For example:

If you make $70,000 a year and pay $10,000 in state income and property taxes, you can use that $10,000 to lower the income that the federal government taxes.
Before the law change, there was a cap on this deduction, which limited how much of those taxes you could deduct.
Now, the cap is higher, so more of your taxes count, which can increase your refund.

Who Will Benefit from the SALT Deduction Change?

The SALT deduction change is expected to help middle-income taxpayers the most. This includes:

People who own homes and pay property taxes.
Families who live in states with higher state income taxes.
Workers who itemize deductions instead of taking the standard deduction.

If you fall into one of these groups, you might see a refund increase of up to $1,000 or more when you file your 2025 taxes in 2026.

Why This Change is Important

Many Americans have struggled with high state and local taxes for years. With the old deduction limit, some people paid more taxes than they should have because they could not deduct enough.

Now, with the higher SALT deduction limit:

Taxpayers can lower their taxable income more.
Families might keep more money in their pockets.
People who itemize can maximize their deductions and reduce the federal tax owed.

This change can be especially helpful for families living in states with high property or income taxes, such as New York, California, and New Jersey.

How Much More Could You Get Back?

Experts estimate that many Americans could see refunds increase by around $1,000 or more. However, the exact amount depends on a few factors:

Income Level: Middle-income families are expected to benefit the most.
Taxes Paid: The more you pay in state and local taxes, the more you can deduct.
Filing Status: Itemizing your deductions instead of taking the standard deduction will maximize your refund.

Remember, if you normally take the standard deduction, this change may not affect you as much. But if you itemize deductions, this could be a big boost to your refund.

How to Prepare for Your 2025 Taxes

To make the most of this change, it’s a good idea to start preparing early. Here are some steps you can take:

1. Keep Good Records

Save all your state and local tax receipts, including:

Property tax bills
State income tax payments
Sales taxes (if itemized)

Having good records makes it easier to claim the full deduction when you file your taxes.

2. Decide Between Standard and Itemized Deduction

Before filing, compare:

Standard deduction: A fixed amount set by the IRS.
Itemized deduction: Add up all your deductions, including SALT, to see if it’s higher than the standard deduction.

If itemizing gives you a bigger deduction, you could increase your refund.

3. Consult a Tax Professional

Tax laws can be complicated, and every situation is different. A tax professional can help you:

Determine if itemizing is better than the standard deduction
Make sure you claim the full SALT deduction
Plan ahead for next year’s taxes

Other Changes in the OBBBA

The SALT deduction is just one part of the One Big Beautiful Bill Act. The law also includes:

Changes to child tax credits
Adjustments to education credits
Updates to retirement savings rules

While the SALT change is expected to have the biggest effect on refunds for middle-income taxpayers, these other changes could also save you money.

Key Takeaways

The SALT deduction cap has increased, allowing taxpayers to deduct more state and local taxes.
Middle-income families who itemize deductions will benefit the most.
Refunds could increase by up to $1,000 or more when filing 2025 taxes in 2026.
Keep records, review deductions, and consult a tax professional to maximize your refund.

This is good news for millions of Americans, especially those paying high property or state income taxes. With some planning, you can make sure you get every dollar you deserve back from the IRS.

Final Thoughts

Taxes can be confusing, but the One Big Beautiful Bill Act brings a welcome change for many taxpayers. By increasing the SALT deduction, the law helps families keep more of their hard-earned money.

Start preparing now by keeping good records, considering itemizing your deductions, and consulting a tax professional. That way, when you file your 2025 taxes in 2026, you could get a bigger refund and feel more confident about your finances.

This is a great opportunity to make sure your taxes work for you, not against you.