What is the SALT deduction?

The State and Local Tax (SALT) deduction allows you to deduct certain taxes you’ve paid to state and local governments—like taxes paid on wages and salaries, real estate taxes on owned property, and sales tax—from your federal taxable income.

You can only claim the SALT deduction if you itemize your deductions, meaning you’re not claiming the standard deduction on your tax return. With the enactment of the One Big Beautiful Bill Act, the maximum amount of the deduction has been increased.

This increase may change whether it makes sense for you to itemize deductions vs. claiming the standard deduction when you file your return. You may want to reevaluate your situation with these changes, especially if you live in a high-tax state.  

What is the SALT cap?

For tax years 2025 to 2029, the SALT deduction cap temporarily increases to:

• $40,000 for Single, Head of Household, Qualifying Surviving Spouse, and Married Filing Jointly filers*
• $20,000 for Married Filing Separately filers*

For incomes above $500,000* or $250,000* for Married Filing Separately, the deduction is phased down by 30% of the excess income until it reaches a minimum of $10,000.

*: Increases annually by 1% for inflation

In 2030, the deduction cap reverts permanently to $10,000 or $5,000 for Married Filing Separately.

State and Local Tax (SALT) Deduction limit prior to 2025

Prior to 2025, if you itemized your federal income tax return, you could also deduct amounts paid for state and local income (or sales) and property taxes.

For tax years 2018 to 2024, the cap was:

• $10,000 per return for Single, Head of Household, and Married Filing Jointly filers
• $5,000 for Married Filing Separately filers

What is a SALT deduction? What taxes count?

The SALT deduction is a provision in the U.S. tax system that lets taxpayers deduct certain amounts paid to their state or local government from their federal taxes.

Only certain types of state and local taxes count. These include:

1. State and local income taxes: What you pay to your state based on your earned and unearned income.
2. Sales taxes: You can opt to deduct either income tax or sales tax, not both.
3. Property taxes: Taxes you pay if you own a home or land.

You can’t deduct federal taxes, gas or utility taxes, or taxes on home renovations or special local assessments.

How does the SALT tax work and how do you claim it?

Here’s the process of claiming the SALT deduction:

1. As we touched on above, you can only claim the SALT deduction if you itemize your deductions.
2. Use IRS Schedule A to list all your itemized deductions, including the SALT deduction. On Schedule A, there’s a section specific to state and local taxes. You’ll enter:
3. Either state income tax or sales tax (you pick one); and
4. Property taxes you paid
5.  When you file your taxes on Form 1040, you’ll include Schedule A to show the IRS your itemized deductions.

Get help claiming the SALT deduction

Need help claiming the SALT deduction? Whether you choose to file with a tax pro or file with H&R Block Online, you can rest assured that we’ll get you the biggest refund possible.