SALT Deduction Cap 2026: $40,400 Limit, Who Benefits, and What Changes in 2030

The SALT (State and Local Tax) deduction cap is $40,400 for 2026, up from $40,000 in 2025 — a four-fold jump from the $10,000 limit that had been in place since the 2017 Tax Cuts and Jobs Act (TCJA). It’s one of the more consequential pieces of Trump’s One Big Beautiful Bill (OBBB), and it’s temporary: the higher cap runs through 2029, then reverts to $10,000 in 2030.

Here’s a case that shows why the number on the calendar matters. A married couple in New Jersey paying $15,000 in property taxes and $12,000 in state income tax could only deduct $10,000 of that $27,000 under the old rule — effectively paying federal tax on money already sent to the state. Under the 2026 cap, they can deduct the full $27,000, since it’s under the $40,400 limit.

What the 2026 SALT Cap Actually Covers

The SALT deduction lets you subtract state and local taxes from your federal taxable income if you itemize. It covers property taxes plus either state income taxes or state/local sales taxes — not both.

For 2026, the combined cap is $40,400 for single filers, married couples filing jointly, and heads of household. Married couples filing separately are capped at $20,200 each.

These figures are part of a five-year phase-in written directly into the OBBB’s text: the cap rose from $10,000 to $40,000 in 2025, then to $40,400 in 2026, and increases another 1% annually through 2029 before the whole provision expires.

The MAGI Phase-Out: Does It Apply to You?

The higher cap doesn’t apply equally to everyone. Once your Modified Adjusted Gross Income (MAGI) exceeds $505,000 in 2026, the $40,400 cap starts shrinking — by 30 cents for every dollar you earn above that threshold.

The deduction keeps dropping until it hits the original $10,000 floor, which happens once MAGI reaches roughly $606,300. Even the highest earners never lose the deduction entirely; it just reverts to the pre-OBBB $10,000 limit — the Bipartisan Policy Center’s breakdown of this phase-down mechanism is a good resource if you want to see the math applied to more income levels.

Example: Priya and Dev file jointly with a MAGI of $540,000 — $35,000 over the $505,000 threshold. Their cap is reduced by 30% of that excess ($10,500), bringing their allowable SALT deduction down to $29,900 instead of the full $40,400.

Itemizing vs. the Standard Deduction

The higher SALT cap only helps if your total itemized deductions on Schedule A beat the standard deduction. For 2026, the standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers.

Besides SALT, itemizing also lets you count mortgage interest (on up to $750,000 of debt), charitable gifts, and unreimbursed medical expenses over 7.5% of your AGI. If you’re weighing a mortgage refinance, the interest you’d pay factors directly into this math.

Example: The Martins, a married couple, pay $12,000 in property taxes and $10,000 in state income tax ($22,000 SALT total) plus $12,000 in mortgage interest. Their itemized total of $34,000 beats the $32,200 standard deduction — so itemizing wins, where it wouldn’t have under the old $10,000 SALT cap.

Who Actually Benefits Most

Homeowners in high-property-tax or high-income-tax states see the biggest impact — think New York, New Jersey, California, and Connecticut. For many middle-class families in those states, this can mean $3,000 to $7,000 in federal tax savings that simply didn’t exist under the old $10,000 cap.

Residents of no-income-tax states with high property taxes (Texas, for instance) can also benefit meaningfully. I break down how state tax burdens compare more broadly in my California vs. Florida tax refund comparison, which is useful context if you’re weighing a move.

Retirees without a mortgage tend to benefit less, since they’ve lost the mortgage-interest piece that used to help push them over the standard-deduction threshold.

Strategic Moves to Maximize Your 2026 Deduction

If you’re close to the itemization threshold, “bunching” deductions into a single tax year is worth considering. That means timing payments — prepaying next year’s property tax bill in December, for instance, or front-loading a few years of charitable giving through a donor-advised fund — so you clear the standard-deduction bar in one year and take the standard deduction in the next.

I cover a few more year-end moves like this in my year-end tax deductions guide. One more thing worth knowing: you can only deduct state and local income tax or sales tax, not both — most people in states with an income tax come out ahead deducting that instead of sales tax.

Subscribe or follow us — I’ll update this page as the phase-out thresholds and cap amounts change each year through 2029.

How the SALT Cap Interacts With the New Senior Deduction

If you’re 65 or older, there’s a separate $6,000 deduction available for tax years 2025 through 2028, on top of whatever you claim for SALT. It’s available whether you itemize or take the standard deduction, though it phases out starting at $75,000 income for singles and $150,000 for couples.

For a couple over 65 who also itemizes to take advantage of the $40,400 SALT cap, that’s potentially $45,000-plus in combined deductions before even counting mortgage interest. I hear from readers on fixed incomes in high-property-tax areas fairly often, and this stacking is genuinely one of the more useful — and more overlooked — parts of the new law for that group.

Common Issues to Watch Out For

I get a handful of the same questions and mix-ups on this topic every year, so here’s what trips people up most:

Thinking the $40,400 is a credit. It’s a deduction, not a dollar-for-dollar credit. If you’re in the 24% bracket, a $10,000 increase in your deduction saves you roughly $2,400 in actual tax — meaningful, but not a 1:1 reduction in your bill.

Assuming the cap applies per tax type. The $40,400 is a combined total across property tax, state income tax, and local taxes — you can’t deduct $40,400 for property taxes and another $40,400 for income tax.

Not realizing SALT doesn’t carry over. Unused SALT deduction capacity in one year doesn’t roll into the next — it’s a use-it-or-lose-it annual limit.

Overlooking the AMT interaction. The Alternative Minimum Tax used to blunt a lot of SALT’s value for high earners. Under current law, most TCJA-era AMT relief stays in place, so the AMT shouldn’t meaningfully interfere with your SALT deduction through 2029 for most filers — though it’s still worth running the numbers if you’re close to AMT territory.

Business Owners: Pass-Through Entity Workarounds Still Matter

If you own an S-Corp or partnership, the state Pass-Through Entity Tax (PTET) workaround that many states created after 2018 is still valuable even with the higher personal cap. PTET lets the business itself deduct state taxes at the entity level, with no cap at all.

That means an owner can deduct 100% of business-related state taxes through PTET and still have the full $40,400 personal SALT cap available separately for property taxes. PTET deductions also generally aren’t subject to the MAGI phase-out that applies to the personal cap. If your business generates significant income, it’s worth talking to a tax professional about whether a PTET election makes sense for your state.

2026 SALT Cap: Savings Comparison Table

Here’s how the math plays out for a married couple filing jointly with $250,000 in household income (24% federal bracket), $35,000 in total SALT paid, and $5,000 in other itemized deductions (mortgage interest, charitable gifts):

Under the old cap, this family’s itemized total ($15,000) didn’t beat the standard deduction, so they’d take the standard deduction. Under the 2026 cap, itemizing wins by $7,800 — worth roughly $1,872 in actual tax savings at a 24% marginal rate.

Should You Adjust Your Withholding?

If you expect to save $2,000 or more from the higher SALT cap, you may be over-withholding through your paycheck and effectively giving the government an interest-free loan until you file. It’s worth reviewing your Form W-4 with your employer to adjust withholding so that money shows up in your regular paycheck instead of a refund the following year.

Before you do, check your latest property tax assessment, estimate your state income tax from recent paystubs, and run the numbers through your preparer or tax software to see whether you’ll clear the $32,200 (joint) or $16,100 (single) itemizing threshold for 2026.

Looking Ahead: The 2030 Snapback

The $40,400 cap is not permanent. Under current law, the expanded rules expire after the 2029 tax year, and the limit reverts to $10,000 in 2030 with no MAGI phase-out — the same flat cap that applied from 2018 through 2024.

That gives high-tax-state homeowners a four-year window (2026 through 2029) to plan around. If you’re weighing a major home renovation that would raise your property tax bill, or timing a large charitable gift, doing it while the higher cap is in effect makes the deduction worth more. I expect plenty of political debate over extending or adjusting this provision as 2030 approaches — the tax brackets and broader OBBB provisions are worth watching alongside it, since Congress tends to revisit several expiring pieces together. I’ll update this page as anything changes.