If you own property in California, understanding your tax deductions can significantly impact your financial planning—and potentially your estate planning strategy. With recent legislative changes affecting homeowners, now is the time to evaluate whether itemizing or taking the standard deduction makes sense for your situation.
Source: CBS News – Homeowner Tax Deductions for 2026
Who Should Read This Guide?
This article is specifically for:
What Tax Deductions Can California Homeowners Claim in 2026?
The IRS begins accepting tax returns on January 26, 2026, and California homeowners have several key deductions available:
1. Mortgage Interest Deduction
The mortgage interest deduction remains one of the most valuable tax breaks for homeowners. However, fewer people claim this deduction since the 2017 Tax Cuts and Jobs Act nearly doubled the standard deduction.
Key numbers to know:
How to decide: You benefit from itemizing only if your combined eligible expenses (mortgage interest, property taxes, charitable donations) exceed your standard deduction.
2. State and Local Tax (SALT) Deduction – Major 2026 Change
The most significant change for California homeowners this tax season is the expansion of the SALT deduction cap from $10,000 to $40,000. This change stems from last year’s “big, beautiful bill” legislation.
What you can deduct:
Who benefits most from this change? California homeowners in high-tax areas with significant property tax bills. If you have a large mortgage with high interest rates and live in an area with elevated property taxes, itemizing could provide substantial savings.
3. Energy Home Improvement Tax Credits – Important Deadline
Energy-focused home improvement tax credits were eliminated at the end of 2025 under the “big, beautiful bill”. However, if you completed qualifying energy upgrades in 2025, you can still claim these credits on your current tax return.
Critical requirement: The work must have been completed (not just purchased) by December 31, 2025. Qualifying improvements include solar panels, improved insulation, and other clean-energy upgrades.
Should California Homeowners Itemize or Take the Standard Deduction?
According to lending expert Kate Wood from NerdWallet, “Everyone’s situation is different. So much will depend on your income and then also where you live”.
Consider itemizing if you:
The standard deduction may be sufficient if you:
How These Tax Changes Affect Your California Estate Planning
For California residents focused on protecting family wealth and ensuring smooth asset transfers, tax planning and estate planning go hand-in-hand. The increased SALT deduction cap can impact:
Real-World Example: A Sacramento Homeowner’s Situation
Consider a married couple in Sacramento with:
Their calculation:
This exceeds the $31,500 standard deduction by $30,500, making itemizing clearly beneficial. Without the increased SALT cap, they could only deduct $49,000 ($39,000 + $10,000), making itemizing less advantageous.
Take Action: Protect Your Home, Your Family, and Your Legacy
Understanding homeowner tax deductions is just one piece of comprehensive financial and estate planning. As California residents prepare their taxes and face the complexity of protecting family assets, working with experienced professionals who understand both tax implications and estate planning strategies becomes essential.
California Probate and Trust, PC specializes in helping California homeowners and families:
With offices serving Fair Oaks, Sacramento, and San Francisco, California Probate and Trust, PC has helped thousands of California residents protect their homes and secure their legacies.
Schedule Your Free Estate Planning Consultation
Don’t navigate complex tax and estate planning decisions alone. California Probate and Trust, PC offers free one-hour consultations to California residents who want to understand how current tax changes affect their long-term family protection strategies.
Contact us today:
Whether you’re preparing this year’s tax return or planning for generations to come, having the right guidance makes all the difference.
Legal Disclaimer
This article is provided for informational purposes only and does not constitute legal, tax, or financial advice. Tax laws are complex and subject to change, and individual circumstances vary significantly. The information presented is based on current federal tax law as of January 2026 and may not reflect the most recent legislative changes or IRS guidance. California Probate and Trust, PC is a law firm specializing in estate planning, probate, and trust administration, not tax preparation services. For specific tax advice regarding your individual situation, please consult with a qualified tax professional or certified public accountant. For estate planning guidance related to your California assets and family protection strategies, contact California Probate and Trust, PC for a personalized consultation. Nothing in this article creates an attorney-client relationship, and you should not act upon this information without seeking professional counsel suited to your particular circumstances.