LA Homeowners: 2025–2029 Tax Changes Could Save You $7,200 a Year

Starting in 2025, new tax laws could give big tax relief to Los Angeles homeowners. This is especially true in expensive neighborhoods where property taxes and home values are much higher than average. These laws apply to returns filed in 2026. Expanded deductions and a higher SALT deduction cap could mean thousands back in your pocket each year.

Whether you are buying your first home, upgrading, or downsizing for retirement, these changes can increase your tax deductions. They can also expand your mortgage interest deduction and lower your tax bill for many years.

Why This Matters for LA Buyers

In the real estate industry, timing can make all the difference. Los Angeles homeowners face some of the highest income tax rates, property taxes, and interest rates in the country. The 2025 updates target middle- to upper-income households in high-tax states. If your income is under the new phase-out limits, you could see tax relief every single year through 2029.

✅ 1. Higher Standard Deduction — with a Bonus for Seniors

Starting in 2025 (IRS 2025 inflation adjustments):

• $31,500 for married couples filing jointly

• $15,750 for single filers

• + $6,000 per person if you’re age 65 or older

Phase-out limits for the senior bonus:

• Starts at $75,000 MAGI (single) / $150,000 (married filing jointly)

• Fully phased out by $175,000 (single) / $250,000 (married filing jointly)

✅ 2. SALT Deduction Cap Increase

The State and Local Tax (SALT) deduction cap, which covers property tax and state income tax, is rising:

• From $10,000 → $40,000 in 2025 for most filers ($20,000 for married filing separately)

• Cap increases by 1% annually through 2029

• Reverts to $10,000 in 2030 unless extended by Congress

Phase-Outs:

• Married couples: $500,000–$600,000 MAGI

• Single filers: $250,000–$300,000 MAGI

The expanded SALT cap is a major tax break for Los Angeles homeowners. Raising the limit from $10,000 to $40,000 delivers real tax relief in a market where home prices and property taxes run high. For many, it means thousands back each year — money that can offset interest rates or fund future plans in the real estate industry.

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🏠 Example: Buying a $1.5M Home in Los Angeles

If you:

• Buy a $1.5 million home

• Put 20% down and finance $1.2M at 6.75%

• Earn $250,000 per year in a 24% federal tax bracket

Estimated First-Year Deductions:

• Mortgage interest deduction: $81,000

• Property tax: $18,750

• State income tax: $21,250

Total potential deductions: $121,000

Tax Savings Before vs. After the 2025 Change

➡ Extra ~$7,200/year in savings — $36,000 over five years. This ongoing tax relief can make a real difference. It is especially helpful if you are using today's fixed-rate mortgages while interest rates are still high. These savings can offset higher monthly payments, free up funds for renovations, or build reserves for your next move.

Bottom Line for LA Homeowners

If you’re planning to buy, sell, or downsize in Los Angeles in the next few years, these changes could influence your timing and strategy. Expanded deductions mean more money to reinvest in your next home — and in the real estate industry, smart timing often pays off.

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Thinking about making a move?

Let's create a clear, step-by-step plan. The right timing and strategy could save you thousands and open the door to your next home. Also check out this post about whether you should buy your next home before you sell your current one.

P.S. Want to stay in the loop on what’s really happening in Los Angeles real estate? Whether you already own a home or hope to one day, my once-a-month newsletter is packed with useful insights—no fluff, no pressure.