Homeownership comes with many costs. There’s your monthly mortgage payment, maintenance, homeowners’ association dues, utilities, and, of course, property taxes.
While these are all unavoidable, some of them come with a small silver lining: a tax deduction. This simply means you can deduct their cost from your total taxable income, reducing your tax bill come April.
Property taxes are one of the major tax-deductible costs that come with owning a home, and the deduction just increased significantly in 2025. Here’s how this deduction works and how much you can write off this year.
What are property taxes?
Property taxes are a type of levy paid by homeowners. They’re based on your property’s value and go toward local services such as schools, police forces, firefighters, hospitals, infrastructure, road upkeep, and more.
Each taxing jurisdiction — a school district, county, city, hospital district, or police department, for example — has a separate tax rate. This rate is then multiplied by your property’s assessed value and added up to get your total property tax bill for the year.
You’ll pay property taxes annually based on an updated assessment of your home’s value. Generally, the more your property grows in value, the more you’ll pay in taxes (though you can protest your home’s value if you think it’s incorrect).
Is there a property tax deduction?
Property taxes are tax deductible. The Internal Revenue Service considers them a state and local tax (SALT), and they are deductible under the IRS’ SALT deduction. You can deduct property taxes paid throughout the year, and if you recently bought your home, you’re eligible to deduct the real estate taxes you prepaid on closing day too.
SALT deductions have historically been limited to $10,000 per year, but since the One Big Beautiful Bill passed in 2025, they are now capped at $40,000 annually per household or $20,000 if you’re married and file your tax returns separately. This cap is for all state and local tax deductions (not just property taxes) and can include any sales and income taxes paid to your state and local governments across that tax year.
Note: Federal income taxes, HOA fees, Social Security taxes, and transfer taxes are not considered SALT deductions, per the IRS. Talk to a tax pro if you’re unsure what qualifies.
Itemizing vs. taking the standard deduction
Taxpayers have the option to either take the standard deduction — a lump-sum amount that all taxpayers are allowed to write off every year — or itemize their returns and write off a number of smaller deductions all at once. (SALT deductions are an itemized deduction).
Before filing your returns, you’ll want to run the numbers to see whether the standard deduction or your itemized deductions total up to more savings. The right choice may vary by year.
Keep in mind that the value of the standard deduction also changes regularly. Here are the breakdowns for the tax years 2025 and 2026:
