Are Property Taxes Deductible in 2025? Everything Homeowners Need to Know

When you purchase a home, you’ll be required to pay various fees, such as homeowner’s insurance and property taxes.

Property taxes are one of the most significant recurring costs of homeownership. While they can add thousands of dollars to your annual expenses, they may also help you save money on your federal income taxes if you qualify for a deduction.

Property taxes are typically paid to your county or local government and fund essential services like public schools, emergency responders, and infrastructure. However, how much you owe and whether you can deduct it depends on where you live and your overall tax situation.

So, is property tax deductible in 2025? In many cases, yes. Keep reading to learn how the updated SALT deduction affects your ability to write off property taxes and lower your overall tax bill.

What Are Property Taxes?

Property taxes are imposed by local governments like cities, townships, and counties. Anyone who owns property and pays taxes on it, whether residential or commercial, pays property taxes.

The amount individuals pay varies greatly depending on their location and the value of the property. Each county typically has its own property tax rate.

In many cities, property taxes are the main source of revenue for local governments and fund public services and infrastructures like police and fire departments, schools, garbage collection, and so forth.

What Is the Property Tax Deduction?

So is property tax tax-deductible? In some cases, the property tax deduction is a benefit that allows property owners to deduct the amount they pay in property taxes from their income when filing income tax returns in April of every year. Taking deductions effectively reduces your taxable income, lowering your overall tax liability.

In the US, property taxes can typically be deducted up to a certain limit when using itemized deductions. The IRS allows homeowners to write off state and local property taxes on their federal returns, but you must itemize your deductions rather than taking the standard deduction.

As of 2025, under the One Big Beautiful Bill Act, the total SALT deduction limit, including property taxes, state income taxes, or sales taxes, has been increased to $40,000 for single filers and married couples filing jointly. For married individuals filing separately, the cap is $20,000.

This change from the previous $10,000 cap greatly expands potential tax savings for homeowners, particularly in high-tax states like California, New York, and New Jersey.

Properties Eligible For Tax Deduction

Of course, there are different types of property other than real estate properties. Personal property refers to any property that’s not real estate. So is personal property tax deductible? The good news is that you don’t have to be a homeowner to take advantage of property tax deductions. You can take deductions on the following types of property:

• Primary residence
• Vacation homes
• Rental properties
• Land
• Vehicles
• Boats

Non-Deductible Property Tax Payments

Tax deductions aren’t available for all types of property taxes. Non-deductible property tax payments include:

• Taxes on property you don’t legally own
• Unpaid property taxes
• Tax assessments
• The portion of the property tax bill that’s for various services
• Taxes on the sale of the property

In addition, any amount that exceeds the $40,000 property tax deduction limit does not qualify for a deduction.

How Much of Your Property Taxes Are Tax Deductible?

As of 2025, you cannot deduct all of your property taxes if they, combined with other state and local taxes, exceed a certain threshold. Previously, the Tax Cuts and Jobs Act (TCJA) of 2017 capped the deduction for all state and local taxes (SALT), including income, sales, and property taxes, at $10,000 for individuals or married couples filing jointly ($5,000 for married filing separately).

However, the One Big Beautiful Bill Act, signed into law on July 4, 2025, significantly expanded this cap.

Now, homeowners can deduct up to $40,000 in SALT taxes, including property taxes, if filing as an individual or married couple jointly, and $20,000 if married and filing separately.

This updated cap offers meaningful tax relief, especially for property owners in high-tax states like California, New York, and New Jersey.

How To Claim the Property Tax Deduction

The property tax deduction is an itemized deduction, so the only way to claim is to choose to itemize your deductions instead of taking the standard deduction. In some cases, taking the standard deduction might make more sense for you if it translates to a higher deduction, so speaking to an accountant or professional tax preparer may be beneficial.

The property tax deduction is claimed on Form 1040 Schedule A, which is used for itemizing deductions. When using this form, you must enter the total amount of property taxes paid, the county which determines the tax rate, and the property number, which you can find on your property tax bill or assessment notice.

If you don’t pay property taxes directly and your payments instead go through an escrow account, you’ll receive Form 1098 from your lender, showing you the amount of deductible interest paid for the year and the total amount of property tax made on your behalf.

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Property Tax Deduction: Best Practices

The property tax deduction can help reduce your taxable income, thereby reducing your tax liability for that year. Don’t forget to take these deductions because they can save you money and help you increase your tax refund. Here are some property tax deduction tips to help you get started:

Understand the Eligibility Criteria

Individuals are only eligible for the property tax deduction if they itemize their deductions on their tax returns. In addition, you should check whether the property qualifies for the deduction. As a general rule, if you’re a homeowner, your property taxes for your house qualify for the property tax deduction.

Determine if Itemizing Is Beneficial

Itemizing your deductions isn’t always a good idea. Many people save more money by taking the standard deduction. You should assess whether itemizing deductions would be more advantageous than taking the standard deduction.

It’s important to keep in mind that reducing your taxable income too much may impact your eligibility for a loan. Mortgage underwriters tend to use tax returns to determine a borrower’s ability to repay the loan, so if you take too many deductions, your income might not qualify you for some mortgage loans.

Of course, if your tax returns don’t accurately reflect your income, there are other mortgage programs you can use when you need to purchase property again. These low-doc loans allow you to qualify for a mortgage without tax returns, pay stubs, or W-2s. Learn more about what underwriters look for on tax returns.

Usually, the only reason to take the itemized deduction is when your itemized deductions add up to more than the standard deduction. You can calculate your potential itemized deductions, including property taxes, mortgage interest, and other eligible expenses, to determine which option provides the most tax savings.

File Your Tax Return on Time

You should always file your taxes on time to avoid any penalties or interest charges that can increase your tax liability. If you forget to file your taxes by the deadline, file them as soon as possible or try to file them early to prevent this from happening.

Keep Organized Records

You’ll receive your property tax bill twice a year in the mail, or your lender may make payments on your behalf through an escrow account. In any case, you should keep organized records of property tax statements, bills, and payment receipts for ease of filing.

If, for some reason, you haven’t kept your property tax bills, you can check your bank statements to determine the total amount you paid in property taxes. However, you’ll still need crucial information contained on your assessment, so you may have to contact your local tax assessor’s office.

Your lender will send you a form around tax season of every year to help you keep organized records of all payments made on your behalf.

In addition, you should keep copies of your filed tax returns and all supporting documents for a minimum of three years in case of future audits.

Consult With a Tax Professional

If you have a complex tax situation or are unsure about claiming property tax deductions, it’s advisable to seek guidance from a tax professional or accountant. These individuals can help you determine whether you should choose the standard or itemized deduction and help you find even more savings opportunities you might not know about.

Final Thoughts

While being a homeowner comes with its fair share of financial responsibilities, it’s one of the best investments you can make. You can write off property taxes to offset some of the costs of homeownership, but finding the right mortgage loan for your unique situation is crucial.

The right mortgage loan can help you save throughout the life of your loan. Talk to a Griffin Funding mortgage specialist today. We’re mortgage experts specializing in many different types of home loan programs, from conventional to non-QM loans like bank statement loans and investment property loans.

We can work with you to determine which loan type matches your needs and help you understand property taxes and other potential real estate deductions you may be able to claim during tax season.

Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 23 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 11 years in business.