SALT Deduction 2026:
Your Limit Just Jumped to $40,000

The SALT Deduction Just Got a Massive Upgrade

The State and Local Tax (SALT) deduction allows you to deduct the taxes you pay to your state and local government from your federal taxable income. For years, this deduction was capped at just $10,000 — a number that felt insulting to anyone living in states like New York, California, or New Jersey where property taxes alone can easily exceed that.

In July 2025, the One Big Beautiful Bill Act changed everything. The SALT cap jumped from $10,000 to $40,000 for taxpayers earning under $500,000. That’s a $30,000 increase — and for many homeowners, it translates to thousands of dollars in real tax savings.

This Affects You If You Pay State or Property Taxes

The SALT deduction covers state income taxes, local income taxes, and property taxes. If you itemize deductions on your federal return, you can now deduct up to $40,000 of these combined taxes — a dramatic improvement from the previous cap.

You Must Itemize to Claim the SALT Deduction

Here’s the catch that many taxpayers miss: you can only claim the SALT deduction if you itemize your deductions on Schedule A — not if you take the standard deduction. The standard deduction for 2026 is $16,100 for single filers and $32,200 for married couples filing jointly.

This means the SALT deduction only makes sense if your total itemized deductions — including mortgage interest, charitable contributions, and now up to $40,000 in state and local taxes — exceed your standard deduction. For homeowners in high-tax states, this is almost always the case.