Affluent Taxpayers in Mid-West and South Use SALT Deduction

Affluent taxpayers in states including Ohio, Colorado, North Carolina, Michigan, and Pennsylvania are increasingly utilizing the state and local tax (SALT) deduction to reduce their federal tax liabilities. While this deduction was historically the primary tool for residents of high-tax states such as New York and California, shifting economic conditions have expanded its utility to other regions.

Rising property values have increased the property tax burdens for homeowners in these states, making it more financially beneficial for taxpayers to itemize their deductions rather than claim the standard deduction. Tax planners report that some clients in these affected states saved several thousand dollars during the most recent filing period.

Because the Federal government of the United States provides the SALT break as a federal deduction for taxes already paid to state governments, this trend reduces federal tax revenue. The shift does not impact state revenues, as the taxes are paid to the states regardless of whether the taxpayer claims the federal deduction.