Because my taxable income was reduced by $18,000 due to my 401k contribution, I saved a total of $5,300 between Federal and State income tax as a result.Therefore, if I hadn't contributed $18,000 to my 401k, I would have paid $5,300 more in taxes, for a net difference of $12,700.

Plus you still have the mortgage right off which is greater write off than deprecation and it does not recapture putting you in forever 1031 to save on tax as your gains are not only tax deferred but tax FREE..

I live in California, so am I going to have to pay South Carolina income tax as well as CA?

Should New York enact a 2% wealth tax, a wealthy New Yorker could wind up paying a 77% tax on short-term stock market profits.

Let's assume you buy a house for $115,000 with 20% down as investment, at an interest rate of 5%, so the loan amount is $92,000 (almost as much as your balance on your student loans), wich will bring you a monthly mortgage payment of $494 + property tax $200 + property insurance $100, a total of $794.00/month expense for this home.Let's further assume that you are renting this home for $1400, that will give you a $606 cash flow per month.In the same time, you will get to amortize the $115000 for over 27.5 years, meaning that $4182 will be deducted from your taxable income, and if you are in a 25% tax bracket ( and I bet your in a higher tax bracket based on your income) you will save about $4182 x 25% = $1045 per year, plus, out of the $494 mortgage payment at the end of 12 months your paid about $1500 in principal, meaning your $92000 balance on the loan is down tot $90,500.So let's see, after the first 12 months, you have a home that if it appreciates at 3% a year, you are in the following situation:Home worth:                    $118,450Balance on the loan:         $90,500, ( paid off$1500)Cash flow:                          $7,272Saved on tax a min of        $1,045So at the end of the year your $23000 down-payment brought you back:$3,450 in appreciation$7,272  in cash flow$1,045 in tax savings ( minimum)$1,500 in principalTotal of $13,267 in cash you gained in 12 months for an investment of $23,000, so you can get your money back in less than two years.Imagine taking this to the next step of using the 75K as down-payment for a 3-4 flat with more cash flow, more tax deductions, more principal gained, and higher appreciation. 

I have thought about that capital gains tax a lot.

Cash flow is cash flow, no complaints there, but the extra income will be in the top tax bracket, so I am trying to see if there are any strategies for reducing income tax as much as I can, such as how I can pay less tax legally on any cash flow from investment properties.

Its a constant battle, even in Tahoe where we have a vacation rental but needed a permit to do so and collect and pay tourist tax as well.  

They have a higher capital gains tax.

The SALT limitation only applies to personal property (and/or individual income tax) as it's limited to Schedule A.