A recent increase in the SALT deduction cap will lead to lower taxes for some taxpayers. But what are SALT taxes, and who will benefit? Bottom Line Personal asked tax expert Abby Eisenkraft, EA, for details…
What Is the SALT Tax?
“SALT” is the acronym for “State and Local Taxes.” Some people pay plenty of these—the top state income tax brackets in California, Hawaii, New Jersey and New York are above 10%, for example. Income taxes aren’t the only SALTs—property taxes paid on real estate and vehicles also are SALTs, as are sales taxes paid to state or local governments.
What Is the SALT Deduction?
The SALT deduction allows taxpayers who itemize their federal tax returns to subtract the taxes they pay to state and local governments from their income when calculating the taxes they owe to the federal government. But there are caps on how much SALT tax can be deducted, and not every type of tax can be deducted.
Taxpayers can deduct property taxes and income taxes paid to state and local governments…but they can deduct sales taxes only if they opt not to deduct those state and local income taxes. In other words, the SALT deduction offers a property-tax deduction for taxpayers who itemize rather than take the standard deduction, but these taxpayers must choose between a state income tax deduction and a sales tax deduction.
Recent Changes to the SALT Deduction Cap
The Tax Cuts and Jobs Act (TCJA), signed into law in 2017, set a $10,000 SALT deduction cap. The One Big Beautiful Bill Act, signed into law in 2025, raised that figure from $10,000 to $40,000 for the 2025 tax year. This cap will inch upward by 1% per year for the remainder of the 2020s, then fall back to $10,000 in 2030 unless additional legislation is passed. That $40,000 cap applies to both single taxpayers and married taxpayers filing jointly, but the cap is just $20,000 for married taxpayers who file separately.
The increases in the SALT deduction cap phase out for taxpayers who have modified adjusted gross incomes (MAGIs) between $500,000 and $600,000 (between $250,000 and $300,000 if married filing separately). The cap remains $10,000 for taxpayers whose MAGIs exceed the upper end of these ranges.
Who Benefits from the SALT Deduction?
The biggest beneficiaries are homeowners who have high incomes—though not so high that they exceed the MAGI phase-outs cited above—and who live in areas with steep property and income tax rates. “We’ve been waiting for this for years and years,” says Eisenkraft. “A $10,000 limit for a state like New York was brutal.”
Unmarried high-earning taxpayers in high-tax states are especially likely to benefit—that $40,000 SALT deduction cap is more than double the $15,750 standard deduction available to single taxpayers in 2025. The $40,000 cap is less of a leap from the $31,500 standard deduction available to married taxpayers filing jointly.
Practical Tips for Taxpayers and Special Considerations
To claim the SALT deduction, taxpayers must file Schedule A, Itemized Deductions. Before filing, confirm that itemizing leads to a lower tax bill than simply claiming the standard deduction.
Someone who has been planning to make a substantial charitable donation should consider doing so in a year when he/she is itemizing to claim the SALT deduction, so that donation can be deducted, too.
Owners of certain “pass-through entities,” including S corps, partnerships and LLCs, sometimes can deduct the SALT taxes paid by those pass-through entities using a strategy called the “SALT cap workaround.” As of early 2026, the specific rules, state deadlines, and optimal planning strategies regarding the workaround are in flux, requiring annual review, says Eisenkraft. Business owners who might qualify should keep on top of the situation and discuss it with their tax advisors.
