What is the 2025 SALT deduction cap?

Under the OBBB Act, the State and Local Tax (SALT) deduction is capped at $40,000 for 2025 ($20,000 for Married Filing Separately). The 2026 cap rises modestly to $40,400 / $20,200 with inflation. SALT covers state income tax (or general sales tax — pick one), local taxes, and real estate / personal property tax combined.

Should I deduct state income tax or general sales tax?

Pick whichever is larger. Residents of high-income-tax states (CA, NY, NJ, OR, MN) almost always deduct state income tax. Residents of no-income-tax states (FL, TX, TN, WA, NV, SD, WY, AK, NH) generally deduct general sales tax — either actual receipts or the IRS Publication 600 optional sales-tax tables (Schedule A instructions). You cannot deduct both in the same year.

Does the SALT cap apply if I take the standard deduction?

No. SALT only matters if you itemize on Schedule A. The 2025 standard deduction is $15,750 (single), $31,500 (MFJ), or $23,625 (HOH) under the OBBB Act, so itemizing typically only wins if your total deductible items — including capped SALT, mortgage interest, and charitable gifts — exceed those amounts.

Did the OBBB Act change the SALT cap?

Yes. The OBBB Act raised the SALT cap from $10,000 (2018–2024 TCJA limit) to $40,000 for 2025. The higher cap is temporary: $40,000 for 2025, $40,400 for 2026, then 1% more each year through 2029 (about $40,804, $41,212 and $41,624), and $10,000 again from 2030 (half for married filing separately). It is reduced by 30% of MAGI over $500,000 ($505,000 in 2026), but not below $10,000. If you're married filing separately, the phase-down starts at half those thresholds ($250,000 for 2025, $252,500 for 2026) and you get half of the reduced cap: $20,000 ($20,200 for 2026) minus 15 cents for each dollar of MAGI over the threshold, never below $5,000. This is a major change: high-tax-state filers who previously hit the $10,000 wall now have $30,000+ of additional deductible room.

Are vehicle registration fees deductible as SALT?

Only the portion based on the vehicle's value (the ad valorem personal property tax component) is deductible. Flat registration fees are not. Most states itemize these on the registration bill — look for a 'value-based fee' or 'VLF' line.

SALT Deduction Calculator (2025 & 2026)

Estimate your State and Local Tax deduction under the OBBB Act cap ($40,000 for 2025, $40,400 for 2026). Compare state income tax vs general sales tax and add property tax.

Updated August 24, 2026Reviewed for 2025 & 2026 tax years

IRS-Sourced

Tax Year

Current return

2025 SALT cap: $40,000 ($20,000 MFS) — OBBB Act, Rev. Proc. 2024-40.

Filing status

Deduct state income tax or general sales tax?

Pick whichever is larger — you cannot deduct both in the same year.

State + local income tax paid

Real estate property tax

Personal property tax (vehicle, etc.)

Modified AGI

Deductible SALT (2025)

$23,000

Cap: $40,000 · Total before cap: $23,000

State income tax$15,000

Real estate tax$8,000

Personal property tax$0

Headroom: $17,000

Room left under the cap before SALT becomes capped.

Read the full SALT deduction guide

What is the SALT deduction cap for 2025?

Your 2025 State and Local Tax (SALT) cap, for the filing status and MAGI entered, is $40,000. The statutory cap under the OBBB Act is $40,000 ($20,000 for Married Filing Separately) before the MAGI phase-down. Combined state income tax (or general sales tax — pick one), real estate property tax, and the value-based portion of vehicle registration share this single cap on Schedule A.

2025 SALT cap: $40,000 ($20,000 MFS) under the OBBB Act.
2026 SALT cap: $40,400 ($20,200 MFS) after inflation adjustment.
Filers must elect state income tax OR general sales tax in a single year — never both (IRC §164(b)(5)).
SALT only reduces tax if you itemize on Schedule A instead of taking the standard deduction.

Source:IRS Schedule A Instructions

Sources & References

Primary references used for this content

Schedule A Instructions

Itemized Deductions (Form 1040) — 2025

Official line-by-line SALT instructions (line 5).

View on irs.gov

Schedule A (Form 1040)

Itemized Deductions — About page

Optional sales-tax tables live in the Schedule A instructions (Pub 600 was retired).

View on irs.gov

IRC §164

Taxes — SALT deduction limitation

Statutory basis for the SALT cap and the income-vs-sales election.

View on law.cornell.edu

OBBB Act

One Big Beautiful Bill Act — SALT provisions

Statute that raised the SALT cap from $10,000 to $40,000.

View on congress.gov

✓4 primary sources; links re-checked on a weekly rotation by the source watcher

If you live in California, New York, or New Jersey and own a home, the old $10,000 cap quietly cost you tens of thousands in deductions every year. The OBBB Act's jump to $40,000 is the single biggest change for high-tax-state filers in nearly a decade.

Real-world scenario

New Jersey homeowner, married filing jointly

$18,500 state income tax + $14,000 property tax = $32,500 SALT. Under the old $10,000 cap, $22,500 was wasted. Under the 2025 $40,000 cap, the full $32,500 is deductible — roughly $7,200 less federal tax at a 32% marginal rate.

The part most people miss

The cap is one shared bucket. A few filers assume property tax has its own line — it doesn't. State income tax + property tax + ad valorem vehicle fees all compete for the same $40,000.

Related Tools & Guides

QBI Deduction Calculator Self-Employment Tax Calculator Federal Tax Calculator Self-Employment Tax Guide Quarterly Tax Guide

Disclaimer: This calculator provides estimates for educational purposes only. Not tax, legal, or financial advice. Results may vary based on your specific circumstances. Consult a qualified CPA or tax professional for personalized guidance.