Texas Property Taxes, the New SALT Cap, & Whether to Pay in December or January

Every fall in Texas, the same question shows up with the property tax bill:

“Do I pay this now, or wait until January?” And for 2025, that decision matters more than usual.

A new federal tax law, the One Big Beautiful Bill Act (OBBB), temporarily boosts the federal cap on state and local tax (SALT) deductions. For some Texas homeowners, that opens up a short window to pull more value out of property taxes. For others, the change won’t move the needle.

The goal of this blog is to help you understand when tax timing matters and when you can just focus on having enough cash and avoiding penalties.

On your federal return, SALT is the bucket that includes your state and local property taxes plus either state income tax or sales tax. 

Since Texas doesn’t have a personal state income tax, that usually means:

• Property taxes on your home
• Sales tax, sometimes increased in years when you make large purchases

Before 2018, there was no hard dollar cap on SALT. The 2017 Tax Cuts and Jobs Act changed that by limiting the deduction to $10,000 per return, and that cap has been in place ever since.

Starting in 2025, the OBBB moves that cap significantly higher, but only for a while, and only for taxpayers under certain income levels.

Beginning with the 2025 tax year, the SALT cap increases:

• Up to $40,000 per return (or $20,000 for married filing separately)
• Available in full only if your modified adjusted gross income (MAGI) is at or below about $500,000 (around $250,000 for married filing separately)

Between $500k and $600k of MAGI, the benefit starts to phase down. The cap shrinks as income rises. Once MAGI reaches $600k or more, you’re effectively back at the $10k cap again.

This creates three basic income zones:

1. At or below the threshold: access to the full $40k cap
2. Inside the phase-down band: a moving target where each extra dollar of income can erode the benefit
3. Above the band: back to the original $10k limit

The higher cap is also temporary. It’s indexed up by about 1% per year through 2029 and then under current law, reverts permanently to $10k in 2030. 

So, you’re planning inside a 5 year window, with the biggest jump happening in the 2025 tax year.

The SALT cap only matters if you itemize deductions instead of taking the standard deduction. 

These are the standard deductions for 2025:

• $15,750 – Single and Married Filing Separately
• $23,625 – Head of Household
• $31,500 – Married Filing Jointly

For many Texas homeowners, the itemized list looks like mortgage interest, property taxes, charitable contributions, sales tax.

Without a state income tax and with a relatively generous standard deduction, a lot of middle-income households in Texas still find that itemizing doesn’t beat the standard deduction unless they have a meaningful mortgage and consistent charitable giving.

So, if your total itemized deductions stay below these amounts, you’ll likely claim the standard deduction and the SALT cap becomes a background detail rather than a planning lever. And if your numbers point clearly toward the standard deduction, the timing of your property tax payment will matter more for cash flow and avoiding penalties than for federal tax savings.

Texas leans heavily on local property taxes to fund schools and other local services. There’s no state-level property tax; instead, counties, cities, school districts, and other local entities set rates and send the bill.

Typically, property taxes arrive in the fall, payment is due January 31 of the following year, and for federal tax purposes, the deduction ties to when you pay, not when the bill is issued.

If you pay your bill in December 2025, the deduction falls on your 2025 return. Pay in January 2026, and it lands on your 2026 return. With the SALT cap temporarily is higher in 2025, some Texas homeowners may want to pull that deduction forward into 2025.

⚡If you itemize and your 2025 income is under $500k: you have the most opportunity here. It makes sense for this group to stack additional SALT deductions in 2025. 

That may involve paying your 2025 property tax bill in November or December, if that’s something your county permits and if it’s even realistic for your cash flow. The goal is to see whether paying more property tax in 2025 lets you use more of the available $40,000 SALT room during a year when the rules are temporarily more generous.

⚡If you fall inside the $500-$600k band: it might be more complicated. SALT doesn’t sit at a fixed number in this zone. As income climbs, the cap steps down toward $10k. That means an extra dollar of income can reduce the amount of SALT deduction you’re allowed to take.

Because of that, bunching property taxes into 2025 doesn’t automatically produce a better answer. If your income lives in this band, you’ll need to work with your CPA to run side by side scenarios to see where you land.

⚡If you still end up taking the standard deduction either way, your decision is simpler. Accelerating or deferring property tax payments doesn’t change your federal result. At this point, your only focus is really avoiding penalties and interest with your county.

Many Texas homeowners will fall into this bucket and can make the decision purely on practical grounds.

The new SALT rules bring a meaningful but temporary change. For some Texas property owners, a simpler December v. January choice can shift thousands of dollars in deductions between years. For others, the change doesn’t really make much of a difference. At WG, we help our clients:

• Understand which income band they’re actually in
• Compare scenarios for December vs. January
• Coordinate property tax timing with the rest of their planning

If you’re unsure where you fall in this framework or if you’d like a clearer projection before writing a large check, this is the kind of planning we do every day for Texas business owners, and we’re happy to help – just send us a note and let us know where you’d like some guidance.