Few provisions of the tax code generate as much frustration among homeowners in high-tax states as the SALT cap. Here is exactly what it is, what counts toward it, and why it matters for anyone deciding between the standard and itemized deduction.
What "SALT" actually includes
SALT stands for State and Local Taxes, and it bundles together several categories you pay throughout the year:
- State and local income taxes (or, alternatively, state and local sales taxes — you choose one, not both)
- Real estate / property taxes on your home
- Personal property taxes, such as annual vehicle registration fees based on value
The current ceiling: $40,400 for 2026
No matter how much you actually paid across those categories combined, only $40,400 total can be counted as an itemized deduction for 2026 — a sharp increase from the $10,000 cap that applied from 2018 through 2024. Pay $18,000 in combined state income and property tax, and the full amount is now deductible, something that would have partially exceeded the old cap.
The higher cap phases down for taxpayers with modified adjusted gross income above $505,500 in 2026, and never drops below the original $10,000 floor regardless of income — see our dedicated guide linked above for the exact phase-down math.
Who benefits most now
Homeowners in states with high income tax rates and high property valuations — think California, New York, New Jersey, Connecticut, and Illinois — see the biggest change, since they were the taxpayers most likely to have been capped at $10,000 in the first place. Many of these households can now deduct their full SALT bill for the first time since 2017.
How it interacts with your overall itemizing decision
With a cap this much higher, SALT alone can now clear a meaningful share of the standard deduction on its own for many homeowners — something that was rarely true under the old $10,000 rule. Walk through the full comparison in Standard vs. Itemized Deductions: Which One Saves More Money? and see how the SALT cap combines with your other numbers inside the deduction calculator, which applies the current 2026 limit automatically.
A note on "bunching"
Some taxpayers still near the cap, or affected by the high-income phase-down, use a strategy called bunching — paying two years of property taxes or prepaying deductible expenses within a single calendar year to stack past the standard deduction threshold in one year, then taking the standard deduction the next. This requires careful timing and, ideally, a conversation with a licensed tax professional before you act.
Frequently asked questions
Does the SALT cap apply to married couples filing jointly?
Yes. For 2026 the $40,400 limit applies per return for both single and married-filing-jointly taxpayers; married filing separately is capped at half that amount, $20,200.
Can I choose sales tax instead of income tax?
Yes, filers may elect to deduct state and local sales taxes instead of state and local income taxes, whichever is higher — but not both, and the combined total with property tax still cannot exceed the current $40,400 cap.
Does the SALT cap affect self-employed business taxes too?
The $40,400 cap applies to personal itemized deductions. Certain state taxes paid at the business-entity level for pass-through businesses may be treated differently — this is a nuanced area worth reviewing with a CPA.
Is the higher SALT cap permanent?
No — it is currently scheduled to apply through 2029, rising 1% annually, before reverting to the original $10,000 cap in 2030 under current law, unless Congress acts again before then.