SALT Deduction Calculator

• The cap quadrupled. After sitting at $10,000 from 2018 to 2024, the SALT cap is $40,000 for 2025, $40,400 for 2026 and $40,804 for 2027.
• Property tax counts. Real estate taxes are a core part of the deduction, alongside state income tax (or sales tax) and personal property tax.
• High incomes phase out. Above $505,000 of MAGI in 2026 the cap shrinks by 30 cents per dollar, down to a $10,000 floor.
• Itemizing is required. The deduction only pays off if your total itemized deductions beat your standard deduction.
• The window closes in 2030. Under current law the cap returns to $10,000 in 2030.

Let us explain the SALT deduction in plain words. SALT stands for state and local tax. If you itemize deductions on your federal tax return, the SALT deduction lets you subtract certain state and local taxes you already paid from your federally taxable income. In other words, the federal government does not tax you a second time on money you handed to your state, county or city. Before the modern cap, this was one of the largest itemized deductions in the tax code, and it is the main reason taxpayers in high tax states itemize at all.

The deduction has a long history, but its modern shape comes from two laws. The Tax Cuts and Jobs Act of 2017 capped it at $10,000 a year from 2018 through 2025 and, at the same time, nearly doubled the standard deduction, so the share of filers who itemized fell from about 31% in 2017 to roughly 9%. Then the One Big Beautiful Bill Act, signed on July 4, 2025, raised the cap to $40,000 for the SALT deduction 2025 year, with 1% annual increases after that. The SALT deduction 2026 cap is $40,400 and the SALT deduction 2027 cap is $40,804, before the cap is scheduled to fall back to $10,000 in 2030.

One more thing worth knowing: the SALT deduction lowers your taxable income, not your tax bill directly. A $30,000 deduction is worth $30,000 times your marginal tax rate. At the 24% federal bracket that is $7,200 of real tax saved, which is why a few thousand dollars of extra cap room can matter so much.

Three kinds of taxes go into the SALT deduction, and together they share the single cap:

• State and local income taxes withheld from your pay or paid as estimates, or state and local general sales taxes. You must pick one of the two.
• Real estate property taxes on homes and land you own.
• Personal property taxes, charged yearly on items like vehicles and based on their value.

And here is what does not go into the SALT deduction: federal taxes of any kind, foreign real estate taxes, homeowners association fees, charges for services such as water and trash bills, and flat vehicle registration fees that are not based on the value of the vehicle. You claim the SALT deduction tax amount on Schedule A of Form 1040, and only in a year when you itemize.

The income tax or sales tax choice deserves one extra sentence. Residents of states with no income tax, like Texas and Florida, almost always come out ahead electing sales tax, and the IRS publishes optional sales tax tables so you do not need to keep a year of receipts. Everyone else should simply compare the two numbers, like the calculator above does, and take the larger one.

Yes. The SALT deduction includes property tax: state and local real estate taxes on your home are one of its core parts, and for many homeowners they are the largest part. If your mortgage payment includes escrow for property taxes, the deductible amount is the tax your lender actually paid to the county during the year, which is shown on Form 1098. Personal property taxes, such as the value based portion of a vehicle registration, count as well.

Just remember that your property tax does not get its own separate limit. It is added to your state income or sales tax, and the combined total is what the cap applies to. A New Jersey homeowner paying $15,000 of property tax and $12,000 of state income tax has $27,000 of SALT: fully deductible under the 2026 cap, but only $10,000 of it would have been deductible under the old rules.

The cap and the income level where the phase-out begins both rise 1% a year. Married filing separately figures are half of the amounts shown.

How the phase-out works: once your modified adjusted gross income passes the threshold, your cap falls by 30 cents for every extra dollar of income, but it never drops below $10,000. Example one: a joint filer in 2026 with a MAGI of $555,000 is $50,000 over the threshold, so the $40,400 cap is reduced by $15,000, leaving a $25,400 cap. Example two: a single filer in 2025 earning $520,000 with $38,000 of SALT paid is $20,000 over the threshold, so the cap falls by $6,000 to $34,000, and $4,000 of her SALT goes unused.

That phase-out range has a nickname among tax professionals: the SALT torpedo. Inside the range, every extra dollar you earn is taxed at your normal rate and also destroys 30 cents of deduction, so your effective rate on that slice of income can spike far above your bracket. If your income lands inside the torpedo range, moves that reduce MAGI, such as larger retirement contributions, are worth more than usual.

1. Gather your records. Your W-2 shows state income tax withheld in Box 17. Form 1098 from your mortgage lender shows real estate taxes paid. Keep closing documents for a home bought or sold during the year.
2. Choose income tax or sales tax. Compare your state and local income taxes against your general sales taxes and pick the larger. You cannot claim both.
3. Add your property taxes. Add real estate and personal property taxes on top of the amount from step 2.
4. Apply your cap. Use the cap for your year and income from the table above, or let the calculator at the top of this page do it.
5. Compare against the standard deduction. Add your other itemized deductions, such as mortgage interest and charity. Itemize only if the total is bigger.
6. Enter it on Schedule A. State and local taxes go on lines 5 and 6 of Schedule A of Form 1040, and the capped total flows to your return.

The expanded cap helps a specific profile most: homeowners in high tax states with incomes roughly between $150,000 and $500,000. Before the change, about 91% of the SALT benefit went to households earning over $100,000, concentrated in California, New York, New Jersey, Connecticut, Illinois, Texas and Pennsylvania, and the wider cap does not change that pattern much. If you rent in a low tax state and take the standard deduction, the higher cap changes nothing for you.

Business owners get one extra route. Many states now offer a pass-through entity tax (PTET) election, where a partnership or S corporation pays state tax at the business level and deducts it as a business expense, outside the personal SALT cap entirely. The current federal law kept this workaround available. It is powerful, state specific and deadline driven, so it is a conversation for your tax adviser rather than a calculator.

The new cap also sits next to other new deductions in the same law. If you earn overtime or tips, try our No Tax on Overtime Calculator and read our Schedule 1-A guide: those deductions sit on Schedule 1-A and, unlike SALT, they are available whether or not you itemize.

A bigger SALT deduction only saves you money if your total itemized deductions, SALT plus mortgage interest, charitable donations and others, beat your standard deduction. For 2026 the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly. A worked comparison: a couple with $27,000 of SALT and $14,000 of mortgage interest itemizes $41,000, which beats the $32,200 standard deduction by $8,800. At the 22% bracket, that extra $8,800 is worth about $1,936 of tax saved.

If your SALT total is small and you have no mortgage, the standard deduction is probably still your better deal, and the calculator result above is simply information. This comparison is also why the higher cap matters even to people below it: a SALT figure of $25,000 or $30,000, useless under the old $10,000 cap, can now push a household over the itemizing line for the first time in years.

• Claiming income tax and sales tax together. It is one or the other. Claiming both is one of the most common Schedule A errors.
• Giving property tax its own cap. There is no separate property tax limit. Everything shares the one cap for your year.
• Forgetting the phase-out. A MAGI above $505,000 in 2026 quietly shrinks the cap. Six figure earners near the threshold should run the numbers before assuming the full $40,400.
• Using last year's cap. The cap changes every year through 2029 and drops to $10,000 in 2030. Check the table above for your filing year.
• Itemizing out of habit. Run the standard deduction comparison every year. The right answer flips as your mortgage shrinks and the standard deduction grows.
• Missing the married filing separately penalty. Filing separately halves the cap and the phase-out threshold. It is rarely the winning move for SALT.

Rules verified against IRS and Thomson Reuters summaries, October 2026. This page gives estimates and general information, not tax advice.