SALT Deduction.
In plain English
SALT stands for state and local taxes, and the SALT deduction lets you subtract state and local income taxes (or sales taxes) plus property taxes from your federal taxable income, but only if you itemize instead of taking the standard deduction. There is a dollar cap on how much you can deduct. The 2025 tax law (the One Big Beautiful Bill) raised that cap to $40,000 for 2025 ($20,000 if married filing separately), up from the prior $10,000. The higher cap is temporary for 2025 through 2029, rising slightly with inflation (to $40,400 in 2026) before the rules change again. The benefit phases down for high earners but never drops below $10,000.
01Why it matters
If you live in a high-tax state or own a home with a big property tax bill, the size of this cap directly decides whether itemizing beats the standard deduction for you.
02The math, step by step
Say you paid $28,000 in state income and property taxes. Under the old $10,000 cap you could only deduct $10,000. With the cap raised to $40,000 for 2025, you can deduct the full $28,000, if itemizing beats your standard deduction.
03What this is NOT
The SALT deduction only helps if you itemize. Most filers take the standard deduction instead, in which case SALT does nothing for them. It is also capped, so paying more in state and local tax than the cap does not increase your federal deduction past that limit.
04Receipts
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