SALT Deduction Calculator: 2025–2026 Cap & Limits
Figure out exactly how much state, local, and property tax you can deduct — using the real 2025 and 2026 numbers, not a rounded guess.
“SALT” stands for state and local taxes — the property tax, income tax, and sales tax you already pay outside of your federal return. For eight years, the IRS let you deduct only $10,000 of that, no matter how much you actually paid. That changed with the One Big Beautiful Bill Act (OBBBA): the cap is now $40,000 for 2025 and $40,400 for 2026, though it shrinks back down if your income climbs past a set threshold. The calculator below runs both rules — the cap and the income phase-out — so you get your actual number, not a rule of thumb.
Calculate Your SALT Deduction
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This tool gives an educational estimate based on the SALT rules in effect for tax years 2025–2026 under the One Big Beautiful Bill Act. Figures for 2027–2029 are projected from the statutory 1% annual increase and haven’t been officially published by the IRS yet. This isn’t tax advice — confirm your numbers with a tax professional or IRS Publication 17 before filing.
What Is the SALT Deduction?
The SALT deduction lets taxpayers who itemize subtract certain state and local taxes from their federally taxable income. It covers three things: property tax, plus your choice of either state and local income tax or general sales tax — you can’t claim both. It does not cover federal income tax, Social Security tax, homeowners’ association dues, water and sewer charges, or estate and inheritance tax.
To use it at all, you have to itemize deductions on Schedule A instead of taking the standard deduction. That’s the trade-off at the center of every SALT decision: does adding up your real state and local tax bill, along with things like mortgage interest and charitable gifts, beat the flat standard deduction the IRS already gives you? For years, the $10,000 cap made that question easy to answer — usually no. The higher 2025–2026 cap makes it worth running the numbers again. Our federal income tax calculator can help you see how a larger deduction actually moves your bottom line.
How the SALT Deduction Cap Works in 2025 and 2026
The Tax Cuts and Jobs Act capped the SALT deduction at $10,000 starting in 2018, with no adjustment for inflation. The One Big Beautiful Bill Act, signed in 2025, raised that cap and built in yearly increases through the end of the decade.
The 2025 Cap: $40,000
For the 2025 tax year, most filers — single, married filing jointly, and head of household — can deduct up to $40,000 in combined state and local taxes. Married couples filing separately are capped at $20,000 each, half of the joint amount.
The 2026 Cap: $40,400
The cap rises again for 2026, to $40,400 ($20,200 for separate filers). This is the first of four scheduled 1% increases written into the law, continuing through 2029 before the cap reverts to $10,000 in 2030. The IRS’s own announcement of the 2026 inflation adjustments confirms both figures.
What Counts Toward Your Cap
Your cap covers the total of:
- Real estate (property) tax on your home
- Personal property tax on things like cars, boats, or RVs, in states that charge it annually
- Either state and local income tax or general sales tax paid — whichever you elect, not both
Add those up, and the smaller of that total or the year’s cap is your deduction — before the phase-out below is applied.
The Income Phase-Out: When the Cap Shrinks
The higher cap isn’t available to everyone at full strength. Once your modified adjusted gross income (MAGI) passes a set threshold, the cap starts shrinking by 30 cents for every dollar of income above that line, down to a floor of $10,000 ($5,000 if married filing separately).
For 2025, that threshold is $500,000 MAGI ($250,000 for separate filers). For 2026, it rises to $505,000 ($252,500 separately), and it continues climbing 1% a year alongside the cap itself.
Why the Phase-Out Band Has a Steeper Effective Rate
Inside the phase-out range, every extra dollar of income does two things at once: it gets taxed at your regular bracket rate, and it shrinks your SALT deduction by 30 cents, which raises your taxable income further still. Stack those together and your effective marginal rate in that income band runs noticeably higher than your bracket alone suggests — something worth flagging to a tax professional if you’re near a bonus, RSU vest, Roth conversion, or a large required minimum distribution that could push you into it.
SALT Deduction Cap by Year (2025–2030)
| Tax year | Cap (most filers) | Cap (married filing separately) | Phase-out begins at MAGI |
|---|---|---|---|
| 2025 | $40,000 | $20,000 | $500,000 |
| 2026 | $40,400 | $20,200 | $505,000 |
| 2027* | ~$40,804 | ~$20,402 | ~$510,050 |
| 2028* | ~$41,212 | ~$20,606 | ~$515,151 |
| 2029* | ~$41,624 | ~$20,812 | ~$520,303 |
| 2030 | $10,000 | $5,000 | No phase-out — flat cap |
*2027–2029 figures are projected from the statutory 1% annual increase and haven’t been officially published by the IRS. Check IRS.gov closer to each filing season for the confirmed number.
Itemizing vs. the Standard Deduction: Which Wins?
A bigger SALT cap only helps if your total itemized deductions — SALT plus things like mortgage interest and charitable giving — add up to more than the standard deduction you’d get automatically.
| Filing status | 2025 standard deduction | 2026 standard deduction |
|---|---|---|
| Single / married filing separately | $15,750 | $16,100 |
| Married filing jointly | $31,500 | $32,200 |
| Head of household | $23,625 | $24,150 |
Should You Deduct Income Tax or Sales Tax?
Nine states don’t charge income tax at all, including Texas, Florida, Washington, Nevada, and Wyoming. If you live in one of them, the sales-tax option is the only one available to you — and it’s often substantial if you made a large purchase like a vehicle during the year. If you live somewhere that taxes income, you’ll almost always come out ahead deducting income tax instead, unless a big one-time purchase pushed your sales tax paid unusually high.
Our Texas paycheck calculator and Florida paycheck calculator can help you estimate your take-home pay and plan around the fact that neither state withholds income tax in the first place.
Are Property Taxes Fully Deductible Now?
Property tax is still fully eligible — it’s just folded into the same combined cap as your income or sales tax, not a separate allowance. If you own a car, boat, or RV in a state that assesses annual personal property tax on it, that counts too. States with the highest effective property tax rates, including New Jersey, Illinois, and Connecticut, see the most benefit from this piece of the deduction, since property tax alone can approach the cap before income tax is even added in.
Who Benefits Most From the Higher Cap
The clearest winners are homeowners in high-tax states with income well under the phase-out threshold — think a dual-income household in New York, New Jersey, Connecticut, or California with a mortgage and a meaningful state income tax bill. Before the TCJA cap, taxpayers earning over $100,000 accounted for the large majority of SALT claims, concentrated in a handful of states including New York, New Jersey, California, and Pennsylvania. The 2025–2026 changes largely restore that relief, up to the new limits. Our New York paycheck calculator is a useful next stop if you’re budgeting around New York’s state income tax specifically.
The SALT Cap Workaround for Business Owners (PTET)
If you own a pass-through business — an S corporation, partnership, or certain LLCs — there’s a separate route worth knowing about even with the higher personal cap. More than 30 states now allow a pass-through entity tax (PTET) election, where the business itself pays state tax and deducts it at the entity level, sidestepping the individual SALT cap entirely. It can also reduce a partner’s self-employment tax exposure. The rules vary significantly by state, and stacking a PTET election against the new higher personal cap takes real modeling — this is a case where a CPA familiar with your state’s specific election is worth the conversation.
How to Claim the SALT Deduction on Your Return
Assuming you’ve decided itemizing makes sense, the SALT deduction is reported on Schedule A (Form 1040):
- Choose to itemize deductions on Schedule A instead of taking the standard deduction.
- On line 5a, enter either your state and local income tax or your general sales tax — not both.
- On line 5b, enter your state and local real estate (property) tax.
- On line 5c, enter any state and local personal property tax, such as annual car or boat tax.
- Add lines 5a through 5c together and enter the total on line 5d.
- On line 5e, enter the smaller of line 5d or your year’s SALT cap. That figure is your deduction.
Common Mistakes When Claiming the SALT Deduction
- Using AGI instead of MAGI to check the phase-out threshold. For most filers they’re close, but a few add-backs (like the foreign earned income exclusion) can matter near the line.
- Trying to deduct both income tax and sales tax. The IRS allows one or the other, never both, even if you paid meaningful amounts of each.
- Forgetting personal property tax on vehicles or boats in states that assess it annually — it’s easy to overlook next to the bigger real estate tax line.
- Skipping the standard-deduction comparison. A higher cap doesn’t automatically mean itemizing wins; run both numbers.
- Assuming the current cap is permanent. Absent new legislation, it reverts to $10,000 in 2030 — useful to know if you’re planning multi-year, like timing a large property sale, a Roth conversion, or a Coast FIRE retirement timeline.
- Missing the 2026 itemized-deduction limitation for top earners. Starting in 2026, taxpayers in the 37% bracket get their itemized deductions valued at roughly 35 cents per dollar instead of 37, slightly reducing the real benefit for the highest earners.
Frequently Asked Questions
What does SALT stand for?
SALT stands for “state and local taxes.” It’s shorthand for the combined deduction covering property tax and either income tax or sales tax paid to state and local governments.
Is sales tax deductible instead of income tax?
Yes. You can elect to deduct general sales tax instead of state and local income tax, but not both in the same year. This matters most if you live in a state with no income tax or made a large taxable purchase.
Are property taxes fully deductible now?
Property tax is deductible, but it shares the same combined cap with your income or sales tax choice — it isn’t a separate allowance on top of the $40,400 limit.
Are state income taxes deductible on your federal return?
Yes, if you itemize. State and local income tax is one of the two options (along with sales tax) that count toward the SALT deduction, combined with property tax, up to the year’s cap.
What happens to the SALT deduction cap in 2030?
Under current law, the cap reverts to $10,000 ($5,000 for married filing separately) for tax years beginning in 2030, with no phase-out mechanism — it’s simply a flat $10,000 for everyone. That could change if Congress acts before then.
Can married couples filing separately claim the full SALT deduction?
No. Filing separately caps the deduction at half the joint amount — $20,000 for 2025 and $20,200 for 2026 — and the phase-out threshold is also halved.
Does the SALT deduction affect whether I should take the standard deduction?
It can. Add your SALT deduction to your other itemized deductions, like mortgage interest and charitable gifts, and compare that total to your standard deduction. Whichever is larger is the one worth claiming.
What is MAGI, and why does it matter for the SALT cap?
Modified adjusted gross income is your AGI with certain items added back, such as the foreign earned income exclusion. It’s the figure the IRS uses to determine whether — and by how much — your SALT cap phases down. For most taxpayers without foreign income or unusual add-backs, MAGI and AGI are the same number.
The Bottom Line
The SALT deduction cap is genuinely higher than it’s been since 2017, and for a lot of homeowners in high-tax states, that’s real money. But the size of the benefit depends entirely on three things: your total state and local tax bill, your MAGI relative to the phase-out threshold, and whether your itemized deductions clear the standard deduction bar in the first place. Run your actual numbers through the calculator above rather than assuming the full $40,400 applies to you — and if you’re a pass-through business owner or sitting near the phase-out band, that’s worth a conversation with a tax professional before you file.