New tax law updates could lower your federal tax bill if you own a home in Texas. Here are three changes that may put more money back in your pocket.
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If you own a home and are preparing to file your taxes, there are several recent legislative changes you should know about. These updates are especially relevant here in Texas, where property taxes are a significant part of a homeowner’s budget.
As real estate advisors, we focus on helping our clients manage their property as a long-term financial asset. While we aren’t CPAs, we keep a close watch on tax law changes to help you understand how they might affect your bottom line. Here are the three main updates from the One Big Beautiful Bill Act (OBBBA) that you should discuss with your tax professional.
1. Increase in the SALT deduction cap.The State and Local Tax (SALT) deduction allows homeowners who itemize to deduct certain taxes, like property and sales taxes, from their federal taxable income.
Since 2018, this deduction has been limited to a maximum of $10,000. In North Texas, that $10,000 cap usually only covered the property taxes on a home valued around $400,000.
What’s changing? For the tax years 2025 through 2029, the OBBBA raises this cap to $40,000. This means if you own a home valued between $1.5 million and $2 million, you may now be able to deduct the full amount of your property taxes.
- Income limits. This higher cap applies to those with an annual income under $500,000 ($250,000 if married filing separately).
- The phase-out. For those earning above $500,000, the deduction limit gradually decreases back toward the original $10,000 level.
“Instead of being capped at $10,000, Texas homeowners may now deduct up to $40,000 in state and local taxes through 2029.”
2. New rules for mortgage interest and PMI.There are also important updates regarding the interest you pay on your home loan.
- Permanent interest deduction. The $750,000 limit on deductible mortgage debt was previously set to expire. The new law makes this limit permanent. You can continue to deduct interest on up to $750,000 of debt used to buy or improve your home.
- PMI deductibility. Starting in the 2026 tax year, Private Mortgage Insurance (PMI) will be treated as deductible mortgage interest. If you put down less than 20% when you bought your home, this provides an additional way to lower your taxable income.
- Home equity loans. Please note that interest on home equity loans is still generally not deductible unless the funds were used specifically for home improvements.
3. The end of residential energy credits.If you are looking for ways to save on future home improvements, it’s important to note that two major incentives have already expired.
Credits that ended on December 31, 2025:
- Energy-efficient home improvement credit. It covers items like high-efficiency windows, doors, and heat pumps.
- Residential clean energy credit. This covered solar panels and wind energy systems.
Because these credits expired at the end of 2025, any upgrades installed or purchased now in 2026 generally do not qualify for these federal tax breaks. If you completed these projects before the end of last year, make sure you have your receipts ready to claim them on the return you are filing right now.
How do these changes affect your strategy for this tax season? With the SALT cap increasing and the standard deduction rising, you might find that itemizing your deductions becomes more beneficial than taking the standard deduction for the first time in years.
If you want to discuss how to maximize your current home’s value or explore adding an investment property to your portfolio under these new rules, let’s chat. Send me a message at (214) 267-9222, or email SeychelleSells@vanpoole.com. We love helping our clients maximize their real estate value and minimize their tax burden.