SALT Deduction
The itemized deduction for state and local taxes, and the cap Congress placed on it.
SALT covers state and local income tax, or sales tax in place of it, plus property tax, deducted from federal taxable income by filers who itemize. The deduction was uncapped before the 2017 Tax Cuts and Jobs Act introduced a $10,000 limit.
The cap falls unevenly by geography. In states with high income tax and high property values, state income tax alone often exceeds the limit, so property tax delivers no additional federal benefit. In the nine states with no income tax, the cap frequently does not bind at all.
The cap has been amended since it was introduced, including a substantially higher limit with income-based phase-outs enacted in 2025. Because the figure has moved and is scheduled to move again, the amount applicable to any given tax year is worth confirming against current IRS guidance rather than recalled.
Worked through
Identical income, two states
$200k of household income under the original $10,000 cap, in a high-tax and a no-income-tax state.
- California state tax
- $16,000
- Deductible under the cap
- $10,000
- Texas state income tax
- $0
- Cap binds in Texas
- No
$6,000 of state tax paid but not deductible in one case, and nothing to deduct in the other. The cap only binds where the taxes exist.
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