2025 SALT Cap Could Hurt Top 'Hidden Home Cost'

Homeownership can be a source of joy for many. Whether it’s a fresh start in a different locale or a new life with a loved one, some might call owning a home the “American Dream.”

But the financial costs of homeownership can be a nightmare.

The average annual cost of owning and maintaining a single-family home in the U.S. is over $21,000 a year, according to a 2025 Bankrate study.* Property taxes, maintenance fees, and other so-called “hidden home costs” have some homeowners paying over $34,000 annually in their state.

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Not to mention, recent political movements could make things challenging for American homeowners. The highly debated state and local tax (SALT) deduction could exacerbate home costs and lead to more expensive federal tax bills in 2026. Here’s what to know.

*Bankrate’s ‘hidden home cost of homeownership study’ included 49 out of the 50 U.S. states. New York was excluded due to data limitations.

Property tax among top home costs

As home prices have skyrocketed 197% in the last twenty-five years, hidden home costs are also on the rise. Here’s the pricetag for several items you might not expect when buying a home, according to Bankrate’s survey:

• Home maintenance. The average cost of maintaining a home is over $8,800 per year.
• Utilities and energy. The average annual bill for these services is nearly $4,500.
• Property taxes. Homeowners can expect to pay an average $4,316, if not higher, annually.
• Home insurance. Insuring a single-family home can cost almost $2,300 per year.
• Internet and cable. Homeowners pay an average of $1,515 annually for cable and internet services.

*These numbers come from one survey, costs and averages can vary widely by state and coverage amounts in the case of home insurance.

Another Bankrate survey revealed that nearly half of homeowners with buying regrets cited maintenance and other hidden costs as being “more expensive than expected.” Unanticipated costs, which can include property taxes, were the most common source of buyer regret.

SALT deduction cap could make property taxes more expensive

The SALT deduction has allowed taxpayers who itemize to claim state and local taxes on their federal return for over one hundred years.

But the $10,000 “cap” on SALT — limiting how much of a deduction for state and local taxes taxpayers may claim — has only been in place for about 7-8 years as of 2025.

Created to offset the Tax Cuts and Jobs Act (TCJA) tax cuts, the “SALT cap” is currently under debate in the “One Big Beautiful Bill Act.”

There are two ongoing proposals to permanently extend the SALT deduction limit:

• The U.S. House of Representatives passed its version of Trump's tax plan, which, if approved, would raise the SALT cap from $10,000 to $40,000 starting in 2025, with a phaseout for incomes above $500,000 (married filing jointly). (Incomes above $500,000 would still be subject to the $10,000 cap.)
• The U.S. Senate tax proposal currently calls for maintaining the $10,000 SALT cap, as a placeholder pending negotiation.

So what does this have to do with property taxes?

Well, a big part of your state and local tax (SALT) deduction may come from your property tax bill. If the SALT cap hinders how much you can claim, that could be problematic, particularly in states with high property tax bills.

Worst states for SALT Cap

While taxpayers in all states could be affected by a sustained SALT cap, seven could be hit the hardest when looking at the state and local tax collections per capita from the Tax Foundation:

• District of Columbia (D.C.), where taxpayers pay an average of $14,974 in annual state and local taxes.
• New York with an average of $12,685 per capita.
• California, at $10,319 per capita.
• Connecticut with $9,718 per capita.
• Hawaii, with $9,503 per capita.
• New Jersey at $9,366 per capita.
• Massachusetts, with $9,341 per capita.

While the above figures may have some state and local taxes that aren’t SALT deductions, per capita figures include property taxes, income taxes, and sales taxes — all of which may be included in SALT.

And keep in mind, the per capita numbers are just averages. The $10,000 SALT cap could significantly impact taxpayers who pay more in state and local taxes, especially as property tax rates soar.

Bottom line: Property tax rates are on the rise

Property taxes on single-family homes have risen nearly 7% in recent years, per ATTOM, a real estate data company.

• That’s almost double what the rate was the year before, and the largest in the last five years.
• If property taxes continue to rise, but the SALT cap remains at $10,000, taxpayers could be sandwiched between having to pay higher property tax bills and being unable to claim a full deduction on those increased costs.

However, the House and Senate have yet to agree on the new SALT cap provision details.

In the meantime, you may want to consult with a tax professional to prepare for several potential legislative outcomes. Many families choose mid-year to get some tax planning done, and staying ahead of the curve can help you best respond to changes made on Capitol Hill.

Stay tuned for more updates.

Read More

• SALT Cap Increase? What to Expect in 2025 Tax Reform
• States With the Lowest Property Tax
• GOP Senate Tax Bill: Five Surprising Changes
• Ten Tax Breaks for Homeowners and Homebuyers