What the SALT deduction is

The SALT deduction (State and Local Tax deduction) lets you subtract certain state and local taxes you paid from your federal taxable income. The taxes that count are state income tax, local income tax, property tax, and sales tax — but you can only deduct one of the income tax options, not both. On your federal tax return, this deduction reduces the amount of income the IRS taxes, which can lower your overall tax bill.

The deduction is capped at $10,000 per year for most filers. That means even if you paid $15,000 in state and local taxes, you can only deduct $10,000. Married couples filing jointly also have a $10,000 cap — it does not double to $20,000. This cap has been in place since 2017 and is set to expire after 2025 unless Congress extends it.

Key Takeaways

  • The SALT deduction caps out at $10,000 per year, regardless of how much state and local tax you actually paid.
  • You can deduct state income tax or local income tax, but not both — you choose whichever is larger for your situation.
  • Property tax and sales tax both count toward the $10,000 limit, and you can combine them with whichever income tax option you choose.
  • The deduction only helps if you itemize deductions on your federal return; most filers use the standard deduction instead and get no benefit.
  • The $10,000 cap is scheduled to expire after 2025, which means the deduction may change or disappear depending on future tax law.

Which taxes count toward the SALT deduction

State income tax and local income tax both count, but you pick one or the other — not both. If you live in a state with no income tax (like Texas, Florida, or Nevada), you cannot deduct state income tax, so you would choose local income tax if your city or county charges it. If you live in a state with income tax and your city also charges local income tax, you add them together and deduct the total, up to the $10,000 cap.

Property tax counts separately. Real estate tax on your home, rental property, or land all may have access to. You add your property tax bill to whichever income tax option you chose, and the combined total cannot exceed $10,000.

Sales tax also counts, but only if you choose to deduct it instead of state income tax. You cannot deduct both sales tax and state income tax in the same year. Most people who have the choice deduct income tax because it is usually larger, but if you live in a high-sales-tax state and have low income tax (or no state income tax), sales tax might be the better option.

When the SALT deduction actually saves you money

The deduction only helps if you itemize deductions on your federal tax return. Most people use the standard deduction instead — for 2024, that is $14,600 for single filers and $29,200 for married couples filing jointly. If your itemized deductions (SALT plus mortgage interest, charitable donations, and other deductible expenses) add up to more than the standard deduction, then itemizing makes sense and the SALT deduction is part of that benefit.

If your itemized deductions are less than the standard deduction, you use the standard deduction and the SALT deduction does nothing for you. Because of the $10,000 cap, many middle-income filers find that itemizing does not pay off, especially if they do not have large mortgage interest or charitable donations to add to the SALT amount.

High-income filers in states with steep income or property taxes are most likely to benefit from the SALT deduction, because they are more likely to have itemized deductions that exceed the standard deduction.

How to calculate your SALT deduction

Start by gathering your tax documents: your state income tax return (or local income tax return if applicable), your property tax bill, and your sales tax records if you are using sales tax instead of income tax.

Add up the taxes that apply to you. If you paid $8,000 in state income tax and $4,000 in property tax, your total is $12,000. Since the cap is $10,000, you can only deduct $10,000. If you paid $6,000 in state income tax and $3,000 in property tax, your total is $9,000, so you deduct all $9,000.

If you live in a state with no income tax but high property tax — say $11,000 — you can only deduct $10,000. The remaining $1,000 cannot be carried forward to next year or used in any other way.

The difference between SALT and standard deduction

The standard deduction is a flat amount everyone can use: you do not have to prove you paid any taxes or own property. You simply subtract it from your income, and that is your taxable income. It requires no paperwork and no calculation.

The SALT deduction requires you to itemize, which means listing out all your deductible expenses (SALT, mortgage interest, charitable donations, and a few others) and adding them up. You only get the benefit if that total exceeds the standard deduction. Most filers find the standard deduction is larger, so they use it and ignore SALT entirely.

Because of the $10,000 SALT cap, the deduction has become less valuable for many households. Before 2017, there was no cap, so high-income filers in high-tax states could deduct much larger amounts. The current cap was introduced as part of the 2017 tax law changes and has remained in place since then.

What happens to the SALT deduction after 2025

The $10,000 cap on the SALT deduction is set to expire on December 31, 2025. After that date, the deduction may disappear entirely, or Congress may extend it, raise the cap, or change the rules. Until Congress acts, the cap remains in effect for the 2024 and 2025 tax years.

If you are planning your taxes for 2025 or beyond, keep in mind that the rules may change. Check the IRS website or speak with a tax professional closer to the end of 2025 to learn what the law will be for 2026 and later years.

Frequently Asked Questions

Can I deduct both state income tax and property tax?

Yes. You deduct state income tax (or local income tax, but not both) and add your property tax to it. The combined total cannot exceed $10,000. If you paid $7,000 in state income tax and $5,000 in property tax, you can deduct $10,000 total (not $12,000).

What if I paid sales tax instead of state income tax?

You can deduct sales tax in place of state income tax, but not both. Most people deduct income tax because it is usually larger. Sales tax deduction is more useful in states with no income tax or very low income tax. You can still add property tax to whichever option you choose, up to the $10,000 cap.

Do I have to itemize to use the SALT deduction?

Yes. The SALT deduction only works if you itemize deductions on your federal return. If your itemized deductions total less than the standard deduction, you use the standard deduction instead and get no benefit from SALT. For 2024, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly.

Can I carry forward unused SALT deduction to next year?

No. The $10,000 cap is per year, and any amount over the cap is lost. You cannot save it or use it in a future tax year. If you paid $12,000 in SALT in 2024, you deduct $10,000 and the remaining $2,000 disappears.

Will the SALT deduction still exist in 2026?

The $10,000 cap expires after 2025, so the deduction may change or end depending on what Congress does. Until new law is passed, assume the $10,000 cap applies to 2024 and 2025. Check with a tax professional or the IRS website in late 2025 for information about 2026 and beyond.