The short answer
If you itemize on Schedule A, you can deduct state and local taxes you paid — income taxes or general sales taxes, plus real estate and personal property taxes. These are often called SALT. For 2025, the combined deduction is limited to $40,000 ($20,000 if married filing separately), up from $10,000 ($5,000) for 2024. For 2026, the limit is $40,400 ($20,200 if married filing separately).
At higher incomes the limit shrinks. For 2025, it is reduced by 30% of your modified adjusted gross income (MAGI) over $500,000 ($250,000 if married filing separately), but never below $10,000 ($5,000 if married filing separately). For 2026, the reduction starts at MAGI over $505,000 ($252,500 if married filing separately), with the same $10,000 ($5,000) floor.
If you take the standard deduction, the SALT deduction does not help you.
Which taxes count
| Schedule A line | What it includes |
|---|---|
| 5a | State and local income taxes — or, instead, general sales taxes (you choose one) |
| 5b | State and local real estate taxes |
| 5c | State and local personal property taxes |
| Not deductible | Foreign personal or real property taxes, federal income tax, and Social Security and Medicare taxes, among others |
The limit applies to the total of lines 5a through 5c, not to each tax separately.
The 2025 limit, step by step
| Step | Rule |
|---|---|
| 1. Start | $40,000 |
| 2. Compare income | Is your MAGI more than $500,000 ($250,000 if married filing separately)? |
| 3. Reduce | If yes, subtract 30% of the excess from $40,000 |
| 4. Floor | The result is never less than $10,000 |
| 5. Married filing separately | Use half of the result |
| 6. Your deduction | The smaller of that limit or the state and local taxes you actually paid |
For this purpose, MAGI is your adjusted gross income plus certain excluded income — including income excluded under the foreign earned income exclusion (Form 2555) or from Puerto Rico or American Samoa.
Examples (illustrative, tax year 2025)
| Taxpayer | MAGI | SALT paid | Limit | Deduction |
|---|---|---|---|---|
| Single | $150,000 | $17,000 | $40,000 (no reduction) | $17,000 |
| Married filing jointly | $550,000 | $50,000 | $40,000 − 30% × $50,000 = $25,000 | $25,000 |
| Married filing jointly | $650,000 | $50,000 | $40,000 − $45,000 is below the floor → $10,000 | $10,000 |
| Married filing separately | $300,000 | $25,000 | $40,000 − 30% × $50,000 = $25,000; half = $12,500 | $12,500 |
Should you itemize?
The SALT deduction matters only if your total itemized deductions — SALT plus mortgage interest, charitable gifts, and other Schedule A items — are more than your standard deduction. For 2025, the standard deduction is $15,750 if single, $31,500 if married filing jointly, and $23,625 for head of household.
Example: Jenny is single with $17,000 of state income and property taxes, $6,000 of mortgage interest, and $1,000 of charitable gifts — $24,000 in itemized deductions. That is more than her $15,750 standard deduction, so itemizing saves her more. If her only itemized deduction were $9,000 of state taxes, the standard deduction would be larger. See tax credit vs. tax deduction and the first-time filer guide.
2025 vs. 2026
| Rule | Tax year 2025 | Tax year 2026 |
|---|---|---|
| Limit | $40,000 ($20,000 married filing separately) | $40,400 ($20,200 married filing separately) |
| Reduction starts when MAGI is over | $500,000 ($250,000 married filing separately) | $505,000 ($252,500 married filing separately) |
| Floor | $10,000 ($5,000 married filing separately) | $10,000 ($5,000 married filing separately) |
The 2026 amounts come from IRS Publication 505 (2026), and the 2026 Form W-4 uses the same figures. Publication 505 says the 2026 limit is reduced above the income threshold but does not restate the reduction percentage, so this guide's step-by-step calculation and examples use the 2025 rules. Check the 2026 Schedule A instructions when the IRS publishes them before figuring a 2026 reduction.
Common misconceptions
- "Everyone can now deduct $40,000 of state taxes." Only people who itemize benefit, the deduction cannot exceed what you paid, and the limit is reduced at higher incomes.
- "The limit is per tax." Income (or sales), real estate, and personal property taxes share one limit.
- "High earners lose the deduction entirely." The limit does not go below $10,000 ($5,000 if married filing separately).
- "My property tax abroad counts." Foreign real property taxes are not deductible as SALT. See property abroad.
- "Married filing separately doubles the benefit." Each separate return uses half the limit.
This guide covers the federal deduction. Your state may have its own rules for deducting taxes on your state return; do not assume they match.