What taxes count towards the SALT deduction?
The State and Local Tax (SALT) deduction allows taxpayers who itemize to deduct certain taxes paid to state and local governments. You can deduct your state and local income taxes OR state and local sales taxes, but not both. In addition to income or sales taxes, you can deduct real estate (property) taxes and personal property taxes (like annual vehicle registration fees based on value).
It's important to remember what does not count. Federal income taxes, Social Security and Medicare taxes, estate and inheritance taxes, and transfer taxes on the sale of property are not deductible under the SALT provision. Note that SALT is a standard itemized deduction (Schedule A) and is NOT claimed on the new Schedule 1-A. See our Schedule 1-A Guide for details on other deductions.
What is the SALT cap for each year from 2025 to 2030?
The recent tax changes introduced a dynamic SALT cap. Instead of being locked at $10,000, the cap now adjusts annually before facing a steep cliff in 2030.
| Tax Year | Standard Cap (Single/MFJ) | MFS Cap |
|---|---|---|
| 2024 | $10,000 | $5,000 |
| 2025 | $40,000 | $20,000 |
| 2026 | $40,400 | $20,200 |
| 2027 | $40,804 (+1%) | $20,402 |
| 2028 | $41,212 (+1%) | $20,606 |
| 2029 | $41,624 (+1%) | $20,812 |
| 2030 | $10,000 (Cliff) | $5,000 |
How does the high-earner phase-down work?
The expanded SALT cap is subject to a phase-down for high-income earners. In 2026, if your Modified Adjusted Gross Income (MAGI) exceeds $505,000, your maximum SALT cap is reduced by 30 cents for every dollar over the threshold.
However, there is a hard floor: the cap will never be reduced below $10,000 ($5,000 for MFS), no matter how high your MAGI goes. In 2026, this $10,000 floor is reached when MAGI hits $606,333.
Does it make sense to itemize your deductions now?
With the SALT cap at $40,400, the decision to itemize or take the standard deduction ($32,200 for MFJ in 2026) has drastically changed for many taxpayers, particularly those in high-tax states.
- NJ Homeowner: With $15,000 in property tax, $12,000 in state income tax, and $10,000 in mortgage interest, total itemized deductions hit $37,000. This beats the standard deduction by $4,800.
- TX Resident: No state income tax, but $12,000 in property tax and $15,000 in mortgage interest. Total itemized equals $27,000. The standard deduction ($32,200) still wins.
- CA Bay Area: $25,000 state income tax, $15,000 property tax, and $20,000 mortgage interest. Total SALT is $40,000 (capped). Total itemized is $60,000, beating the standard deduction by $27,800.
What do homeowners save state by state?
Depending on where you live, the expanded cap creates varying levels of tax relief. Here is how homeowners in different states fare when comparing median property taxes.
| State | Median Property Tax | Additional SALT Room |
|---|---|---|
| New Jersey | [VERIFY] | Significant |
| New York | [VERIFY] | Significant |
| Connecticut | [VERIFY] | Significant |
| California | [VERIFY] | Significant |
| Illinois | [VERIFY] | Significant |
| Massachusetts | [VERIFY] | Significant |
| Texas | [VERIFY] | Moderate |
| Florida | [VERIFY] | Moderate |
How can you bunch your property taxes before 2030?
Given that the SALT cap will crash back down to $10,000 in 2030, tax planning is critical. "Bunching" your deductions—such as prepaying your late-2029 property tax bill in December 2029 instead of January 2030—could yield significant savings. Always consult a tax professional before making large prepayment decisions, as strict rules apply to when assessed taxes can be deducted.
How does SALT interact with the AMT?
The Alternative Minimum Tax (AMT) can still limit the benefit of the expanded SALT cap. Because SALT deductions are not allowed under the AMT system, high earners who fall into the AMT may find that the $40,400 cap provides little to no actual tax relief. If you are a high earner with substantial SALT, you should consult a professional to project your AMT liability.
Frequently Asked Questions
Can renters claim the SALT deduction?
Yes, renters can claim state and local income taxes (or sales taxes) up to the cap, even if they do not pay property taxes.
Should I deduct state income tax or state sales tax?
You can deduct either your state and local income taxes OR your state and local sales taxes, but not both. You should choose whichever amount is higher.
What is the SALT limit for Married Filing Separately?
For Married Filing Separately, the SALT cap is exactly half of the standard cap. In 2026, it is $20,200.
Will the SALT cap increase in 2027 to 2029?
Yes, under the current law, the cap increases by 1% each year until 2029, before dropping back to $10,000 in 2030.
Can I prepay my property taxes to get a larger deduction?
You can only deduct taxes assessed and paid in the current tax year. Prepaying unassessed taxes generally does not qualify for an early deduction.
Does the Pass-Through Entity Tax (PTET) workaround still work?
Many states offer a PTET workaround for business owners. The new legislation does not eliminate PTET, but you should consult a tax professional regarding your specific entity.
Sources
By StateTakeHome Data & Research Team
Verified against IRS guidance. Follow us on LinkedIn.
Disclaimer: This calculator provides an estimation for educational purposes only and does not constitute tax advice. Please consult a qualified tax professional regarding your specific situation. Verified against IRS guidance on June 11, 2026.
See also: No Tax on Tips Calculator, Senior Deduction Calculator.