Key Takeaways
- The SALT deduction cap is $40,400 for 2026 and $40,804 for 2027, then $10,000 in 2030.
- Above $505,000 MAGI, the cap shrinks 30 cents per dollar, bottoming out at $10,000.
- It only helps if itemizing beats the $32,200 joint or $16,100 single standard deduction.
- Business owners can stack a state PTET election on top of the personal SALT cap.
The SALT (state and local tax) deduction cap is $40,400 for 2026, up from $40,000 in 2025. That’s roughly four times the $10,000 limit in place since the 2017 Tax Cuts and Jobs Act (TCJA).
It’s one of the bigger pieces of the One Big Beautiful Bill (OBBBA), and it’s temporary. The cap rises 1% a year through 2029, landing at $40,804 for 2027, then snaps back to $10,000 in 2030.
Here’s why it matters. A married couple in New Jersey (NJ) paying $15,000 in property tax and $12,000 in state income tax could only deduct $10,000 of that $27,000 under the old rule. Under the 2026 cap, they can deduct all $27,000.
The SALT Cap by Year, 2025 Through 2030
The cap and the income threshold where it starts shrinking both step up 1% a year. These amounts are written into the OBBBA’s text, so they don’t wait on an IRS inflation announcement.
| Tax year | SALT cap | Phase-out starts (MAGI) |
|---|---|---|
| 2025 | $40,000 | $500,000 |
| 2026 | $40,400 | $505,000 |
| 2027 | $40,804 | $510,050 |
| 2028 | ~$41,212 | ~$515,150 |
| 2029 | ~$41,624 | ~$520,300 |
| 2030 | $10,000 | No phase-out |
The 2028 and 2029 figures are my math on the 1% step-ups, so treat them as close estimates. The cap is the same for single, joint, and head-of-household filers.
Married couples filing separately get half: $20,200 each for 2026.
What the SALT Deduction Covers
The deduction covers property taxes plus either state income tax or state and local sales tax, not both. All of it counts toward one combined cap.
Most people in states with an income tax come out ahead deducting income tax. Sales tax mostly wins in no-income-tax states, or in a year with a big purchase like a car.
How the $505,000 Phase-Out Works
Once your modified adjusted gross income (MAGI) passes $505,000 in 2026, the $40,400 cap shrinks by 30 cents for every dollar over. It stops shrinking at the old $10,000 floor, which happens at about $606,300 of MAGI.
Even the highest earners keep a $10,000 deduction. The Bipartisan Policy Center’s breakdown runs the math at more income levels if you want to see it.
Example: Priya and Dev file jointly with $540,000 of MAGI, which is $35,000 over the threshold. Their cap drops by 30% of that ($10,500), so they can deduct up to $29,900 instead of $40,400.
Itemizing vs. the Standard Deduction
The bigger cap only helps if your itemized deductions beat the standard deduction. For 2026 that’s $32,200 for married couples filing jointly and $16,100 for single filers.
Besides SALT, itemizing lets you count mortgage interest on up to $750,000 of debt, charitable gifts, and medical costs above 7.5% of AGI. If you’re weighing a mortgage refinance, the interest you’d pay feeds straight into this math.
Example: the Martins pay $12,000 in property tax, $10,000 in state income tax, and $12,000 in mortgage interest. Their $34,000 itemized total beats the $32,200 standard deduction. Under the old $10,000 SALT cap, they’d have been stuck at $22,000 and taken the standard deduction.
What Itemizing Is Worth: A $250,000 Household
Here’s the math for a married couple filing jointly with $250,000 of income (24% bracket), $35,000 of SALT paid, and $5,000 of other itemized deductions:
| Old $10K cap | 2026 $40.4K cap | |
|---|---|---|
| SALT deduction | $10,000 | $35,000 |
| Other itemized | $5,000 | $5,000 |
| Total itemized | $15,000 | $40,000 |
| Best choice | Standard ($32,200) | Itemize ($40,000) |
| Extra deduction | — | $7,800 |
| Tax saved (24%) | — | ~$1,872 |
Under the old cap, their $15,000 didn’t come close to the standard deduction. Under the 2026 cap, itemizing wins by $7,800, worth about $1,872 in federal tax.
Get SALT cap and tax-law changes by email
I post when new IRS figures land and if Congress touches the 2030 snapback. Get those updates free in your inbox.
Free. You’ll get my new posts, including these updates. Unsubscribe anytime, and check your spam folder for the confirmation email.
Who Gets the Most Out of the Higher Cap
Homeowners in high-tax states see the biggest change: New York (NY), California (CA), Connecticut (CT), and New Jersey. For a lot of middle-income families there, it’s thousands of dollars of deductions that simply didn’t count before.
High property taxes alone can get you there too, even in a state with no income tax like Texas (TX). If you’re weighing a move, my California vs. Florida tax comparison shows how state tax burdens stack up.
Retirees with a paid-off house tend to benefit less. Without mortgage interest, it’s harder to get past the standard deduction.
Seniors: The $6,000 Deduction Stacks on Top
If you’re 65 or older, the separate $6,000 senior deduction applies for 2025 through 2028. You get it whether you itemize or not, but it phases out starting at $75,000 of income for singles and $150,000 for couples.
A couple over 65 who itemizes can pair the SALT deduction with $12,000 of senior deductions. I hear from readers on fixed incomes in high-property-tax areas a lot, and this stacking is one of the most overlooked parts of the new law for them.
SALT Mix-Ups I See Every Filing Season
I get the same handful of questions on this every year. Here’s what trips people up most.
Treating the $40,400 like a credit. It’s a deduction, not a dollar-for-dollar credit. In the 24% bracket, an extra $10,000 of deduction saves about $2,400 of tax.
Thinking each tax gets its own cap. The $40,400 is one combined limit across property, income, and local taxes. You can’t deduct $40,400 of property tax and another $40,400 of income tax.
Expecting unused room to carry over. SALT is use-it-or-lose-it each year. Room you don’t use in 2026 doesn’t roll into 2027.
Worrying about the AMT. The Alternative Minimum Tax used to wipe out a lot of SALT’s value for high earners. Most TCJA-era AMT relief stays in place, so it shouldn’t interfere for most filers, but run the numbers if you’re near AMT territory.
Missing the separate 37%-bracket limit. A permanent OBBBA rule (Section 68), starting in 2026, caps the tax value of itemized deductions at about 35 cents per dollar. It applies once taxable income passes the 37% bracket: $640,600 single and head of household, $768,700 married filing jointly for 2026.
In practice, it rarely touches SALT itself. By that income level, the phase-out has usually already cut your SALT deduction to $10,000, so Section 68 mostly trims the value of mortgage interest and charitable gifts.
Business Owners: The PTET Workaround Still Matters
If you own an S-corp or partnership, your state’s Pass-Through Entity Tax (PTET) election is still worth a look. PTET lets the business deduct state taxes at the entity level, with no cap.
That means an owner can run business-related state tax through PTET and keep the full personal SALT cap for property taxes. PTET deductions generally aren’t hit by the MAGI phase-out either. If your business makes real money, it’s worth asking a tax pro whether your state’s election makes sense.
Timing Moves for the 2026 Deduction
If you’re close to the itemizing line, “bunching” can push you over. That means stacking deductions into one year, like prepaying an assessed property tax bill in December or front-loading charitable gifts through a donor-advised fund.
You then itemize in the bunched year and take the standard deduction the next. My year-end tax deductions guide covers more moves like this.
If you expect to save $2,000 or more, you may be over-withholding. Reviewing your Form W-4 puts that money in your paycheck now instead of in next spring’s refund.
What the SALT Cap Looks Like in 2027, and the 2030 Cliff
For 2027, the cap rises to $40,804 and the phase-out starts at $510,050 of MAGI. The $10,000 floor kicks in at about $612,700. Because these steps are in the law itself, I don’t expect the IRS’s October inflation update to change them.
Example: Priya and Dev in 2027. Same $540,000 MAGI, but now they’re only $29,950 over the threshold. Their cap drops by $8,985 to $31,819, about $1,900 more room than in 2026.
The bigger date is 2030. Under current law, the cap reverts to a flat $10,000 with no phase-out, the same limit as 2018 through 2024. That leaves 2026 through 2029 as the window for things like a large charitable gift.
What I’m watching: whether Congress revisits the snapback alongside other expiring pieces. The federal tax brackets and several other OBBBA provisions have their own deadlines, and Congress tends to bundle them. I’ll update this page as anything moves.
