The new SALT Tax makes Florida a great place to live — find out why
Recent updates to the federal tax code have stirred plenty of discussion — and for good reason. The Tax Cuts and Jobs Act of 2017 introduced several sweeping changes when it took effect for the 2018 tax year. While the increase in the standard deduction drew the most attention, one lesser-known but highly impactful change was the new cap on property tax deductions.
That single provision has proven to be a major setback for high-income earners in high-tax states — and a powerful incentive for many to consider relocating to low-tax states like Florida.
What Is the SALT Tax?
The State and Local Tax (SALT) deduction allows taxpayers to deduct certain state and local taxes—such as property, income, and sales taxes—from their federal taxable income. Before 2017, this deduction had no limit, which meant homeowners in high-tax states could write off large portions of their state and local payments.
However, the Tax Cuts and Jobs Act of 2017 placed a $10,000 cap on these deductions starting in 2018. This change significantly increased the tax burden for individuals in states with high property and income taxes, while making low-tax states like Florida even more financially appealing.
How the SALT Cap Impacts Taxpayers
Before the cap was introduced, taxpayers could deduct the full amount of their state and local taxes—no matter how high. For example, someone paying $35,000 in state income tax and another $35,000 in property tax could deduct the entire $70,000 from their federal taxable income.
Under the new law, the maximum deduction is limited to $10,000. Using the same example, that taxpayer can now deduct only $10,000 instead of $70,000, effectively adding $60,000 back to their taxable income. This results in a much higher federal tax bill—often thousands of dollars more each year—making high-tax states considerably less attractive for affluent homeowners.
Why the SALT Tax Makes Florida More Attractive
Florida stands out as one of the few states with no state income tax, giving residents a clear financial edge under the SALT cap. While taxpayers in states like New York, California, and New Jersey can no longer fully deduct their high state and local taxes, Floridians avoid that problem entirely.
As a result, many high-income earners have been relocating to Florida to reduce their overall tax burden. The combination of low property taxes, no income tax, and favorable business conditions has fueled steady population growth and a surge in real estate demand.
For new residents, the move offers more than just financial relief—Florida’s warm climate, coastal lifestyle, and growing luxury housing market make it one of the most desirable places to live in the U.S.
The Bigger Picture: Economic and Real Estate Effects
The SALT cap has had a noticeable ripple effect on both the economy and housing markets across the country. High-tax states have seen some residents relocate to escape rising tax bills, while Florida’s real estate market has benefited from the influx of buyers seeking financial and lifestyle advantages.
With its low overall tax burden and absence of a state income tax, Florida consistently ranks among the most tax-friendly states in the nation. This reputation, combined with strong demand for luxury and waterfront properties, continues to drive growth in home values and investment opportunities throughout the state.
Frequently Asked Questions About the SALT Tax
- What is the SALT tax deduction? The SALT tax deduction allows taxpayers to deduct certain state and local taxes—such as property, income, or sales taxes—from their federal taxable income. It helps reduce the overall amount of income subject to federal tax.
- How does the SALT tax work? You can deduct up to $10,000 in combined state and local taxes on your federal return. This includes property taxes plus either state income taxes or state sales taxes, whichever is higher.
- How will the SALT tax affect me? If you live in a high-tax state, the $10,000 cap may increase your federal tax bill since you can no longer deduct all your state and local taxes. If you live in a low-tax state like Florida, the impact is minimal or even favorable.
- What is included in the SALT tax deduction? The SALT deduction covers property taxes, state income taxes, and local sales taxes. However, you cannot deduct both income and sales taxes—only one or the other.
- Does SALT include state income tax? Yes. State income taxes are one of the main components of the SALT deduction, along with property and sales taxes.
- Does the SALT tax include property tax? Yes. Property taxes are fully included in the SALT deduction, but the total combined deduction for all state and local taxes cannot exceed $10,000 per year.
Conclusion
The SALT cap may have tightened tax benefits for residents in high-tax states, but it has only strengthened Florida’s appeal. With no state income tax, lower property taxes, and a thriving economy, Florida offers both financial freedom and an unmatched quality of life. From pristine beaches to world-class golf and boating, it’s easy to see why so many are choosing to make the move.
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