Calculate your State & Local Tax deduction under the new $40,400 cap. Find out if you should itemize or take the standard deduction.
Frequently Asked Questions
What is the SALT cap in 2026?
The SALT (State and Local Tax) deduction cap for the 2026 tax year is $40,400. This is an inflation-adjusted increase from $40,000 in 2025. The cap applies to the combined total of state income taxes (or sales taxes), local income taxes, and property taxes you can deduct on your federal return. For married filing separately, the cap is $20,200.
Who benefits from the higher SALT cap?
Taxpayers in high-tax states benefit the most, especially those in New York, New Jersey, California, Connecticut, Illinois, and Maryland. Homeowners with high property taxes and high-income earners paying significant state income taxes will see the biggest improvement. However, the benefit phases out for taxpayers with MAGI above $500,000, reducing at a 30% rate until it reaches the $10,000 floor.
Should I itemize or take the standard deduction?
You should itemize if your total itemized deductions exceed the standard deduction for your filing status. With the higher SALT cap, more taxpayers may benefit from itemizing, especially homeowners with mortgage interest and significant state/local taxes. Use this calculator to compare your total itemized deductions against the standard deduction.
Which states have the highest SALT deductions?
The top states by average SALT deductions are New York, New Jersey, Connecticut, California, Maryland, Massachusetts, Illinois, Minnesota, Oregon, and Virginia. These states combine high income tax rates with high property values, leading to the largest state and local tax burdens. Taxpayers in these states benefit the most from the increased SALT cap.
When does the higher SALT cap expire?
The increased SALT deduction cap is set to expire after the 2029 tax year. Starting in 2030, the cap will revert to the previous $10,000 limit ($5,000 for married filing separately). The current provision covers tax years 2025 through 2029, with the cap indexed to inflation annually starting from the $40,000 base in 2025.
