For eight years the deduction for state and local taxes was capped at a flat $10,000. That cap is the reason so many homeowners in high-property-tax states stopped itemizing altogether. The 2025 tax law raised it sharply — but the new, larger cap comes with three conditions that decide whether you actually benefit: you have to itemize, your income has to stay below a threshold, and the increase expires. This guide walks through each one.

What counts as SALT

SALT is an umbrella term for the state and local taxes you can deduct on Schedule A. In practice it is three things added together: state and local income taxes (or, if you choose, general sales taxes instead — you pick one, never both), real estate taxes on property you own, and personal property taxes such as value-based vehicle registration. Those figures go on Schedule A lines 5a, 5b and 5c, and the cap applies to their combined total on line 5e.

The cap, year by year

The old $10,000 limit applied from 2018 through 2024. Public Law 119-21 replaced it with an "applicable limitation amount" that steps up and then, several years later, disappears:

  • 2025 — $40,000.Confirmed by the IRS Instructions for Schedule A, which state the overall limit "has increased to $40,000 ($20,000 if married filing separately)."
  • 2026 — $40,400. Set by statute, then rising by 1% per year for 2027 through 2029.
  • 2030 — back to $10,000. The increase is temporary. Unless Congress acts again, the cap returns to $10,000 ($5,000 for married filing separately).

One caution about the 2026 figures on this site, including in our calculator: they come from the statute, not yet from an IRS form. As of this update the IRS has published Schedule A guidance for 2025 only, and its tax-year-2026 inflation-adjustment release does not address the SALT cap at all. We show the statutory numbers and flag them as unconfirmed by the IRS rather than presenting them as final.

The condition most people miss: you must itemize

SALT is an itemized deduction. It only helps you if your itemized deductions — SALT plus mortgage interest, charitable gifts, and the rest — add up to more than your standard deduction. This makes SALT fundamentally different from the tips, overtime and senior deductions, which the IRS confirms are available "whether they itemize deductions or claim the standard deduction."

So a higher cap does not automatically mean a bigger refund. If you pay $18,000 in state and local taxes but have no mortgage and no other large deductions, your itemized total may still fall short of the standard deduction, and the extra headroom above $10,000 does nothing for you. The question to ask is not "how much SALT can I deduct?" but "does deducting it push my itemized total past the standard deduction?"

The income phase-down: 30% of the excess, floored at $10,000

Above a threshold, the cap itself shrinks. The reduction is 30% of the amount by which your modified adjusted gross income exceeds the threshold — and the cap can never be pushed below $10,000. For 2025 the threshold is $500,000 ($250,000 if married filing separately); the statute sets it at $505,000 for 2026, again rising 1% per year through 2029.

Note what the threshold does not do: unlike almost every other tax threshold, it is the same number for single filers and for married couples filing jointly. There is no marriage doubling here. Only married-filing-separately gets a different figure, and it is half, not double.

Example — joint filers, $560,000 MAGI, $52,000 of SALT paid (2026)

  1. Line 1State and local taxes paid$52,000
  2. Line 2MAGI over the $505,000 threshold$55,000
  3. Line 3Cap reduction (30% of excess)−$16,500
  4. Line 4Your SALT cap ($40,400 − $16,500)$23,900
  5. Line 5Deduction — smaller of taxes paid or cap$23,900

Two things are worth pulling out of that example. First, the reduction applies to the cap, not to the taxes you paid — paying more SALT does not soften the phase-down. Second, the $10,000 floor means the deduction never vanishes the way the tips or senior deductions can. Work out where the floor bites: $30,400 of headroom divided by 30% is about $101,334 of excess income, so at roughly $606,334 of MAGI the cap has been ground all the way down to $10,000 and stays there no matter how much higher your income goes.

Example — the floor, $700,000 MAGI (2026)

  1. Line 1MAGI over the $505,000 threshold$195,000
  2. Line 230% of excess (before the floor)−$58,500
  3. Line 3Cap after reduction, stopped at the floor$10,000
  4. Line 4Deduction if you paid $52,000 of SALT$10,000

Three common misunderstandings

  • "It's a $40,400 refund." No — it is a deduction, meaning it reduces the income you are taxed on. What it saves you is the deduction multiplied by your marginal rate, which is a fraction of the headline number.
  • "Married couples get double." They do not. The cap and the phase-down threshold are identical for single and joint filers. A dual-income couple in a high-tax state can hit the cap far more easily than two single filers would.
  • "My state will follow along." Not automatically. States decide separately whether to conform to federal changes, so a bigger federal SALT deduction may not change your state return at all.

Quick answers

  • Income taxes or sales taxes? You choose whichever is larger, but you cannot claim both. Taxpayers in states with no income tax generally take the sales-tax option.
  • Can I combine SALT with the tips, overtime or senior deductions? Yes. Those three sit on Schedule 1-A and do not require itemizing, so they stack on top of whichever deduction path you choose. Our Total Savings Estimator shows them together.
  • Does prepaying next year's property tax help? Only within the rules for when a tax is actually assessed and paid, and only if you are not already at the cap. Ask a tax professional before shifting payments across a year boundary.
  • What if I file separately from my spouse? The cap, the threshold and the floor are all halved. Married filing separately also disqualifies you from the tips, overtime and senior deductions entirely.

To see your own number — the effective cap after any phase-down, and how much more it gives you than the old $10,000 limit — open the SALT deduction calculator. It runs the same steps shown above, in your browser, and shows every line of the arithmetic.