Yes — but with a significant catch that's tripped up a lot of homeowners since 2017.
Property taxes are deductible on your federal income tax return, but the Tax Cuts and Jobs Act capped the total deduction for state and local taxes (SALT) at $10,000 per year. For homeowners in high-tax states, that cap dramatically reduced the real-world value of the deduction.
Here's what you need to know.
The SALT Deduction Cap
Before 2018, you could deduct the full amount of your state and local taxes — including property taxes, state income taxes, and state sales taxes — with no upper limit. A homeowner in New Jersey paying $15,000 in property taxes could deduct all of it.
The Tax Cuts and Jobs Act changed that. Starting in 2018, the combined deduction for all state and local taxes — property taxes plus either income taxes or sales taxes, not both — is capped at $10,000 for single filers and married filing jointly. ($5,000 for married filing separately.)
For homeowners in high-tax states like New Jersey, New York, California, Connecticut, or Illinois, where property taxes alone often exceed $10,000, this cap eliminates the deduction almost entirely. You get the first $10,000, and anything above that provides no federal tax benefit.
For homeowners in lower-tax states — where property taxes are $3,000 to $6,000 per year — the cap may not affect you at all. Your property taxes fit comfortably within the limit, especially combined with state income taxes.
You Have to Itemize
The SALT deduction is an itemized deduction. You can only claim it if your total itemized deductions exceed the standard deduction.
The standard deduction for 2024 is $14,600 for single filers and $29,200 for married filing jointly. That's a high bar. For most homeowners — particularly those without significant mortgage interest, charitable contributions, or medical expenses — the standard deduction wins, and the property tax deduction provides zero benefit.
The homeowners most likely to benefit from itemizing are those with:
- ›Large mortgage interest deductions (big loan balances at higher rates)
- ›Significant charitable contributions
- ›Large property tax bills (up to the $10,000 SALT cap)
If you're not sure which is better for your situation, run the numbers both ways or ask your tax preparer to check.
Which Property Taxes Are Deductible
Only taxes assessed on real property — land and structures — qualify. Specifically:
- ›Deductible: Annual property taxes assessed by your county, city, or state on your primary residence or other real property you own
- ›Not deductible: Special assessments for local improvements (sewer lines, sidewalks, street lighting) that add value to your specific property rather than being a general tax
- ›Not deductible: Fees paid to a homeowners association, even if they're used for similar purposes
- ›Also deductible: Property taxes on a second home, vacation property, or rental property — though rental property taxes are deducted on Schedule E as a business expense, not on Schedule A
Property Taxes on Rental Property
If you own rental property, the rules are different — and more favorable. Property taxes on a rental are a legitimate business expense, fully deductible against your rental income on Schedule E. The $10,000 SALT cap does not apply to investment or rental property — it only covers taxes on property not used in a trade or business.
This means a landlord paying $8,000 in property taxes on a rental property can deduct the full amount, regardless of what they're deducting for their personal residence.
Prepaying Property Taxes
You may have heard that prepaying next year's property taxes before December 31 can help you deduct more in the current year. This is sometimes true — but only if the taxes have actually been assessed by year-end.
You can deduct property taxes in the year they're paid, as long as they've been levied. If your county has issued a bill for taxes due next March, you can pay it in December and deduct it this year. But you cannot prepay taxes that haven't been assessed yet — the IRS specifically disallows this.
The practical window for this strategy is narrow, and with the $10,000 cap, it only helps if you're not already at the limit.
The Current Status of the Cap
The $10,000 SALT cap is scheduled to expire after 2025 — which means it could either be extended, made permanent, or allowed to lapse depending on legislation. There has been ongoing political pressure, particularly from high-tax states, to raise or eliminate the cap. Watch for changes if you're a homeowner in a high-tax state and the deduction matters to your return.