Every year around this time, I get a version of the same question from clients who bought or sold a home recently: “Is there anything I should be doing before the end of the year?”
This year the answer matters more than usual. The federal tax law passed in July 2025 changed several rules that touch homeowners directly, and 2026 is the first full tax year where some of those changes kick in. A few doors opened, and one closed.
I’m a REALTOR®, not a CPA, so think of this as a starting checklist to bring to your tax preparer, not tax advice. But knowing what changed can help you ask better questions while there’s still time on the calendar.
The SALT Deduction Cap Went Up to $40,400
For years, the deduction for state and local taxes (SALT) was capped at $10,000. That cap hurt a lot of California homeowners, because state income tax plus property tax adds up fast.
For 2026, the SALT cap is $40,400 for single and married-filing-jointly filers ($20,200 if married filing separately). It’s set to rise about 1% a year through 2029.
There’s a catch for higher earners. If your modified adjusted gross income is above $505,000, the cap shrinks by 30 cents for every dollar over that line, but it never drops below $10,000.
What this means in Shasta County: a household paying around $3,500–$5,000 in property tax plus California income tax may now have enough deductions to make itemizing worth it again. That wasn’t true for most folks under the old $10,000 cap.
Itemize or Take the Standard Deduction? Run the Numbers Again
The higher SALT cap only helps if your itemized deductions beat the standard deduction. For 2026, the standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers.
Here’s a simple way to think about it. Add up:
- Mortgage interest on your home (on up to $750,000 of mortgage debt)
- Property tax plus state income tax, up to the new SALT cap
- Charitable donations
- Mortgage insurance premiums (more on that below)
If that total lands above your standard deduction, itemizing may save you money. With rates in the high-6% to 7% range on newer loans, a lot of recent Redding buyers are paying more mortgage interest in the first few years than they realize. Your lender’s year-end Form 1098 will show the exact number in January.
PMI Is Deductible Again Starting in 2026
This one is good news for first-time buyers. If you put less than 20% down on a conventional loan, or you have an FHA loan, you’re probably paying mortgage insurance every month.
That deduction lapsed after 2021. The 2025 tax law brought it back, and starting with the 2026 tax year, mortgage insurance premiums can be treated as deductible mortgage interest if you itemize.
It does phase out based on income. The benefit starts shrinking once adjusted gross income passes $100,000 and is gone a little above $109,000 (half those amounts if married filing separately). So it helps moderate-income households most, which is a lot of first-time buyers here in Redding.
If you bought with an FHA, USDA, or low-down-payment conventional loan, ask your tax preparer whether this applies to you.
The Home Energy Credits Are Gone
Now the door that closed. The federal credits that helped pay for solar panels, heat pumps, new windows, insulation, and similar upgrades ended after December 31, 2025.
According to the IRS, the residential clean energy credit (solar and battery) doesn’t apply to expenditures made after 2025, and the energy-efficient home improvement credit doesn’t apply to property placed in service after 2025. Installation timing is what counts.
Two practical takeaways:
- If you finished qualifying work in 2025, make sure it was claimed on your 2025 return. If it wasn’t, talk to your preparer about an amended return.
- If you’re planning upgrades now, don’t budget on a federal credit. Check with PG&E or Redding Electric Utility and any California programs for rebates instead.
Upgrades like a newer HVAC system or dual-pane windows still matter when you sell, though. Buyers here pay close attention to summer cooling costs, and those improvements show up in your price even without a tax credit.
Year-End Moves Worth Asking About Before December 31
If itemizing looks like it makes sense for you this year, a few timing moves may help. These are the common ones to ask your tax pro about:
- Pay your second property tax installment early. Shasta County’s second installment isn’t due until spring, but paying it in December may let you deduct it on your 2026 return, as long as you stay under the SALT cap.
- Make your January mortgage payment in December. The interest portion of that payment generally counts for the year it’s paid. It’s a small bump, but it can tip you over the standard deduction.
- Bunch charitable giving. Giving two years’ worth of donations in one year can push you into itemizing that year.
- Save your closing paperwork. If you bought this year, points you paid at closing may be deductible. Your settlement statement shows them, and I’m always glad to help clients find their closing documents.
None of these are right for everyone. They’re worth a 15-minute conversation with your preparer before the year closes.
Thinking About Selling? Know the Capital Gains Exclusion
Many longtime Redding owners are sitting on a lot of equity, especially folks thinking about downsizing.
The rule here didn’t change: if you’ve owned and lived in your home for at least two of the last five years, you can generally exclude up to $250,000 of gain if single, or $500,000 if married filing jointly, when you sell your primary residence.
Your “gain” is your sale price minus selling costs and your cost basis, which includes what you paid plus capital improvements over the years. That’s why I always tell clients to keep receipts for a new roof, a remodel, or that backyard addition. Those records can lower your taxable gain if you’re ever over the limit.
If your gain might be near or above those numbers, or the home was a rental at some point, get tax advice before you list. The timing of a sale can make a real difference.
The Bottom Line for Shasta County Homeowners
For a lot of Redding households, 2026 is the first year in a while where itemizing could beat the standard deduction again, thanks to the higher SALT cap and the return of the PMI deduction. At the same time, don’t count on federal help for solar or energy upgrades anymore.
My best advice: pull together your property tax bill, your mortgage statements, and any closing documents now, and book a quick call with your tax preparer before December. A little planning in November can be worth more than a lot of scrambling in April.
Let’s Talk About Your Home
Whether you’re wondering what your home is worth heading into 2027, planning a move-up or a downsize, or just want a second set of eyes on your closing paperwork, I’m happy to help. No pressure, just honest local guidance.
530-953-1100 · jcreteam.com/contact · [email protected]
About Justin Cartwright — Justin Cartwright is a third-generation Shasta County resident and licensed REALTOR® with Waterman Real Estate in Redding, CA. He and the JCRE Team specialize in helping buyers and sellers navigate the Redding and greater Shasta County market with honest guidance and genuine care. DRE License #02093872 · Waterman Real Estate, 1760 Churn Creek Rd, Redding, CA 96002 · 530-953-1100.
This post is general information, not tax or legal advice. Please consult a qualified tax professional about your situation. Sources: IRS (FAQs on modification of Sections 25C and 25D under Public Law 119-21); IRS 2026 inflation adjustments; Kiplinger, “SALT Deduction Gets an Update for 2026 Taxes”; One Big Beautiful Bill Act (P.L. 119-21).
