The state and local tax (SALT) deduction lets you deduct state income taxes, local income taxes, and property taxes from your federal taxable income — but only if you itemize. The 2017 Tax Cuts and Jobs Act capped this deduction at $10,000, a limit that hit taxpayers in high-tax states especially hard. Under the One Big Beautiful Bill Act (OBBBA), Congress raised that cap to $40,000 for tax years beginning in 2025, restoring a significant portion of the deduction for millions of filers.
The new $40,000 cap applies to single filers, married filing jointly, and head of household. Married filing separately filers are limited to $20,000. Income-based phase-outs also apply: the cap begins to decrease for single filers with AGI above $400,000 and married-filing-jointly filers above $500,000. For every $1,000 of income above the threshold, the cap is reduced by $20, until it floors back at $10,000.
Remember, the SALT deduction only matters if your total itemized deductions exceed the standard deduction ($14,600 single / $29,200 MFJ for 2026). Use the calculator below to see your deductible amount under the new cap, compare it to the old cap, and determine whether itemizing makes sense for you.
| Detail | Old Rules (TCJA) | New Rules (OBBBA) |
|---|---|---|
| SALT Cap | $10,000 | $40,000 |
| MFS Cap | $5,000 | $20,000 |
| Phase-Out Start | None | $400K / $500K |
Example:A married couple in New Jersey paying $12,000 in state income tax and $14,000 in property taxes previously could only deduct $10,000. Under the new cap, they can deduct the full $26,000 — a $16,000 increase that could save them $3,520 at the 22% bracket.
Calculate your state and local tax deduction under the new $40,000 cap.
This calculator provides estimates for informational purposes only. It does not account for sales tax elections or other itemized deductions. Consult a qualified tax professional for advice specific to your situation.
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