SALT Deduction
An itemized deduction for state and local taxes paid, including income tax (or sales tax) and property tax. Currently capped at $10,000 per return ($5,000 for married filing separately).
The State and Local Tax (SALT) deduction allows you to deduct state and local income taxes (or general sales tax, but not both) plus property taxes as an itemized deduction on your federal return. Since 2018, the total SALT deduction has been capped at $10,000 per tax return ($5,000 if married filing separately).
Before the Tax Cuts and Jobs Act of 2017, there was no cap on SALT, which made it particularly valuable for taxpayers in high-tax states like California, New York, and New Jersey. The $10,000 cap significantly limited this benefit and is one of the main reasons many taxpayers switched from itemizing to the standard deduction.
The SALT cap is currently scheduled to remain at $10,000 through 2025 unless Congress modifies or extends it. Some states have implemented workarounds for pass-through business owners using entity-level SALT elections, which allow the business to deduct state taxes without being subject to the individual cap.
Related Terms
Itemized Deduction
Specific expenses you can deduct instead of taking the standard deduction, including mortgage interest, state/local taxes (up to $10,000), charitable donations, and medical expenses.
State Income Tax
Income tax levied by individual states, in addition to federal income tax. Rates and structures vary widely — some states have no income tax, while others have rates up to 13.3%.
SALT Cap
The $10,000 annual limit on the federal deduction for state and local taxes (income/sales tax plus property tax), enacted by the Tax Cuts and Jobs Act of 2017.
Standard Deduction
A fixed dollar amount that reduces your taxable income, available to all filers who do not itemize. For 2025, it is $15,000 for single filers and $30,000 for married filing jointly.
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