What the SALT deduction is and who can use it

The SALT deduction lets you subtract state and local taxes you paid from your federal taxable income. SALT stands for State And Local Taxes. The types of taxes that count are income taxes, sales taxes, and property taxes — but you can only deduct one of the two: either state income tax or state sales tax, not both.

You can only use this deduction if you itemize deductions on your federal tax return instead of taking the standard deduction. The standard deduction is a flat amount the IRS lets everyone subtract; for 2024, it is $14,600 for single filers and $29,200 for married couples filing jointly. If your SALT deduction plus your other itemized deductions (like mortgage interest or charitable donations) add up to more than the standard deduction, itemizing saves you money. If not, the standard deduction is the better choice.

Key Takeaways

  • The SALT deduction covers state income tax (or sales tax, but not both), local property taxes, and local income taxes paid during the tax year.
  • You can only use the SALT deduction if you itemize deductions, which means your total itemized deductions must exceed the standard deduction for your filing status.
  • There is a $10,000 annual cap on the total SALT deduction per tax return, regardless of how much you actually paid.
  • The $10,000 cap applies to married couples filing jointly as well as single filers, so high-tax states can limit the benefit for higher-income households.
  • Property taxes, state income taxes, and local income taxes all count toward the $10,000 limit combined.

The $10,000 cap and how it affects you

There is a hard limit: you cannot deduct more than $10,000 in SALT per tax return per year. This cap applies whether you are single, married filing jointly, or married filing separately. If you live in a high-tax state and paid $15,000 in property taxes and state income tax combined, you can only deduct $10,000 of it.

This limit was introduced in 2017 and is set to expire after 2025 unless Congress extends it. After 2025, the cap is scheduled to disappear, meaning the full amount of SALT you paid would be deductible again — but that is not may provide. You should check the current tax year rules when you file, because the law may change.

Which taxes count and which do not

Taxes that count toward the SALT deduction are state income tax, local income tax, and property taxes (real estate taxes on your home or other property). You can deduct either state income tax or state sales tax, but not both in the same year — you choose whichever is larger.

Taxes that do not count include federal income tax, federal payroll taxes (Social Security and Medicare), gasoline taxes, vehicle registration fees, and homeowners insurance. Mortgage interest is a separate deduction and does not count toward SALT.

How to calculate your SALT deduction

Start by adding up what you actually paid. Gather your state income tax return (or sales tax receipts if you are using that instead), your property tax bill, and any local income tax statements. Add these together. If the total is more than $10,000, your deductible amount is $10,000. If it is less than $10,000, your deductible amount is what you actually paid.

Next, add up all your other itemized deductions: mortgage interest, charitable donations, medical expenses above the threshold, and any others. Add that total to your SALT deduction (capped at $10,000). If this combined total is larger than the standard deduction for your filing status, you should itemize. If not, take the standard deduction instead.

You report the SALT deduction on Schedule A of Form 1040 when you file your federal return. Your tax software will usually calculate this for you and show you which option saves more money.

SALT deduction in high-tax versus low-tax states

The $10,000 cap hits hardest in states with high income taxes and high property taxes. In states like California, New York, New Jersey, and Illinois, many homeowners pay more than $10,000 in property taxes alone, so they cannot deduct the full amount they paid. In lower-tax states, most people do not reach the cap and can deduct everything they paid.

This means the deduction is worth more to you if you live in a low-tax state or have a low income. A homeowner in Texas (no state income tax) with $8,000 in property taxes can deduct all $8,000. A homeowner in New York with $12,000 in property taxes and $5,000 in state income tax can only deduct $10,000 of the $17,000 they paid.

When to itemize versus taking the standard deduction

You should itemize if your total itemized deductions (SALT plus mortgage interest, charitable donations, and other deductible expenses) exceed the standard deduction. For 2024, that threshold is $14,600 for single filers and $29,200 for married couples filing jointly. If you are over 65, the standard deduction is higher.

If you are close to the threshold, add up everything: SALT (capped at $10,000), mortgage interest, property taxes already counted in SALT (do not double-count), charitable donations, and medical expenses above 7.5 percent of your adjusted gross income. If the total is higher than the standard deduction, itemize. If not, take the standard deduction.

Many people with moderate incomes and a mortgage benefit from itemizing. People who rent, have no mortgage, and live in low-tax states usually benefit from the standard deduction.

What happens after 2025

The $10,000 SALT cap is scheduled to expire on December 31, 2025. Starting in 2026, if Congress does not extend the cap, you would be able to deduct the full amount of SALT you paid with no limit. However, Congress may extend the cap, modify it, or let it expire — the outcome is not yet decided.

If you are planning your taxes for 2025 or beyond, assume the cap stays in place unless you hear otherwise. Tax law changes happen in Congress, and you should check the rules for the year you are filing in.

Frequently Asked Questions

Can I deduct both state income tax and sales tax?

No. You choose one or the other, whichever is larger. Most people choose state income tax because it is usually the bigger number, but if you live in a state with no income tax and high sales tax, you would choose sales tax instead. Your tax software will calculate both and show you which saves more money.

Does the $10,000 cap explore to married couples filing separately?

Yes. Each spouse filing separately gets a $5,000 cap, not $10,000. This is almost always worse than filing jointly, so married couples should compare both filing statuses before deciding.

What if I paid property taxes in two different states?

All your SALT counts toward the same $10,000 cap. If you own property in two states and paid $6,000 in property taxes in one and $5,000 in the other, your total SALT deduction (before adding other itemized deductions) is capped at $10,000, so you can deduct all $11,000 you paid — but only $10,000 counts.

Can I deduct property taxes I paid in advance?

Only if you actually paid them in the tax year you are filing for. If you paid 2025 property taxes in December 2024, you can deduct them on your 2024 return. The IRS looks at when you paid, not when the taxes are owed.

Do I need receipts to claim the SALT deduction?

You should keep records of what you paid: your property tax bill, state income tax return, and any local tax statements. The IRS does not usually ask for these unless you are audited, but having them protects you if questions come up later.