SALT Cap (State and Local Tax Deduction)
taxAlso known as: SALT, state and local tax deduction
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
The SALT cap was originally $10,000 under the 2017 Tax Cuts and Jobs Act, severely limiting deductions for residents of high-tax states (NY, NJ, CA, IL). The 2025 OBBBA raised the cap to $40,000 starting in 2026, with annual inflation indexing through 2029, then reverting to $10,000 in 2030. The cap phases down 30% on MAGI above $500,000 (floor $10,000). Property tax, state income tax, and (instead of state income) sales tax can be combined under the cap. Workarounds like Pass-Through Entity Tax (PTET) elections in many states let business owners deduct their state tax at the business level instead of personally — bypassing the cap.
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