What you'll need
- Annual property tax — the real-estate line on your escrow statement
- State and local income tax paid (or sales tax, if your state has no income tax)
- Mortgage interest from Form 1098
- Your modified adjusted gross income and filing status
What you'll get
- Itemize or take the standard deduction — A direct answer, with both totals shown
- Your actual SALT cap — After the high-income phase-out is applied
- SALT lost to the cap — What you paid but can't deduct
- Value of the increase — Federal tax saved vs. the old $10,000 cap
Where these figures come from
The $40,400 cap, the $505,000 phase-out threshold, the 30% reduction rate, and the $10,000 floor are taken from 26 U.S.C. §164 and the IRS 2026 Form 1040-ES correction notice. The standard deduction amounts come from IRS Rev. Proc. 2025-32. Full source links are at the bottom of this page. Still a simplified model, and still not tax advice.
What actually changed
The Tax Cuts and Jobs Act capped SALT at $10,000 in 2018, which for many homeowners in high-tax states meant property tax alone consumed the entire cap and state income tax became fully non-deductible. The 2025 legislation raised the cap roughly fourfold, added a phase-out for high earners, set small annual increases through 2029, and scheduled a reversion to $10,000 in 2030.
The detail most coverage gets wrong: the cap is not doubled for married couples. Single, married filing jointly, and head of household all receive the same $40,400. Two unmarried co-owners each get their own full cap; a married couple gets one between them. Only married filing separately differs, at half.
Who this actually helps
Fewer people than the headline suggests, and the reason is the standard deduction. At roughly $32,000 for a married couple, itemizing only wins if SALT plus mortgage interest plus charitable giving clears that bar. Raising the SALT cap moves you toward the bar — it does not lower it.
- Helped most: homeowners in New Jersey, New York, Connecticut, Illinois, California and Massachusetts with property tax above $10,000, a state income tax, and an active mortgage — and income below the phase-out threshold.
- Helped somewhat: homeowners in high property tax, no-income-tax states such as Texas, where property tax alone can now be fully deducted where it previously could not.
- Not helped: anyone whose total state and local taxes were already under $10,000, and anyone whose itemized total still falls short of the standard deduction.
- Helped then un-helped: high earners. Above the threshold the cap grinds back down toward $10,000, so the households with the largest SALT bills often get the least benefit from raising the cap.
The phase-out is the interesting part
Because the cap falls by 30 cents for every dollar of income above $505,000, there is a band of income where earning more costs you deduction. Inside that band your effective marginal tax rate is meaningfully higher than your stated bracket — an extra dollar of income is taxed normally and shrinks a deduction you were taking. For a joint filer in 2026 that band runs from $505,000 up to about $606,333, at which point the cap has hit its $10,000 floor and further income has no additional SALT effect. That upper figure is calculated from the statutory rate rather than stated in the law itself. If your income lands in that band, it is worth modeling with a tax professional before making decisions about bonus timing or Roth conversions.
How we calculate this
- Property tax plus your elected state income or sales tax gives total SALT paid.
- The cap is looked up for your filing status, then reduced by the phase-out based on your MAGI, never below the floor.
- Deductible SALT is the lesser of what you paid and your effective cap.
- Total itemized is deductible SALT plus mortgage interest plus other Schedule A items.
- That is compared against your standard deduction, including any age-65 or blind additions.
- The “value of the higher cap” re-runs the whole comparison at the old $10,000 cap and takes the difference in the deduction you would actually claim — so it correctly reports $0 for anyone who takes the standard deduction either way.
Everything runs in your browser; nothing you type is transmitted or stored on our servers. This is a simplified model that does not handle the alternative minimum tax, state-level itemization rules, or pass-through entity tax elections.
Sources
- IRS — Correction to the state and local tax deduction amount in the 2026 Form 1040-ES (states the $40,400 cap, $505,000 threshold, and $10,000 floor)
- 26 U.S.C. §164 — Taxes (statutory cap and phase-out text)
- IRS IR-2025-103 — tax inflation adjustments for tax year 2026 (standard deduction; underlying Rev. Proc. 2025-32)
- IRS — Topic no. 503, Deductible taxes
- One Big Beautiful Bill Act (P.L. 119-21) — congress.gov
This calculator is educational and is not tax advice. Consult a licensed tax professional about your own return.
Related calculators
- Property Tax Calculator — estimate the property tax that feeds this
- Mortgage Calculator — payment, and the interest you may deduct
- Mortgage Affordability Calculator
- Rent vs. Buy Calculator — where the deduction actually shows up
- Closing Costs Calculator
- 2026 Home Energy Tax Credits — the tax change that goes the other way
The state and local tax deduction is capped at $40,000 ($20,000 married filing separately) for 2025. The cap itself phases down once modified adjusted gross income passes $500,000 ($250,000 MFS), falling by 30 cents per dollar of excess — but never below a $10,000 floor ($5,000 MFS).
The phase-down almost nobody models correctly
Most SALT explanations stop at the headline cap. The mechanic that actually determines a high-income filer's deduction is the phase-down, and it reduces the cap rather than the deduction.
The consequence is a band of income across which each additional dollar earned costs you 30 cents of deductible cap. Between the threshold and the point where the floor bites, the effective marginal rate on income is meaningfully higher than the headline bracket — which is exactly the kind of thing worth knowing before accelerating income into a year.
Both the cap and the phase-down are set out by the IRS, with the mechanics in the Schedule A instructions.
What the cap applies to, and what it does not
The cap is a single limit covering the sum of your state and local taxes — not a separate allowance for each. That means property tax and income tax compete for the same headroom, which is why the cap binds hardest in states that levy both heavily.
Two structural points. The deduction is available only if you itemise, so a household whose total itemised deductions fall below the standard deduction gets no benefit from SALT at all regardless of what they paid. And this cap is separate from the home mortgage interest deduction, which IRS Publication 936 limits to the first $750,000 of acquisition debt ($375,000 married filing separately) — the two limits interact only through whether their combined total clears the standard deduction.
The $40,000 cap is described by the IRS as a temporary increase effective for calendar years beginning in 2025. We have not published a reversion year here because we could not confirm one from a primary IRS source, and guessing at a future tax rule is not something this calculator will do.
Methodology
The cap, the $500,000 ($250,000 married filing separately) modified-AGI threshold, the 30-percent phase-down rate and the $10,000 ($5,000) floor are taken from IRS Topic 503 and the Schedule A instructions for 2025. Mortgage interest limits are from IRS Publication 936. This calculator models the federal deduction only and does not compute state tax liability itself.
Sources
- IRS — Topic no. 503, Deductible taxes — accessed 2026-09-05
- IRS — Instructions for Schedule A (Form 1040), Itemized Deductions — accessed 2026-09-05
- IRS — Publication 936, Home Mortgage Interest Deduction — accessed 2026-09-05
Frequently asked questions
What is the SALT deduction cap for 2026?
The One Big Beautiful Bill Act raised the state and local tax deduction cap from the $10,000 set by the Tax Cuts and Jobs Act to roughly $40,000, with a small annual increase scheduled through 2029 and a reversion to $10,000 in 2030. Married taxpayers filing separately get half. The cap phases down for high incomes. Because the exact indexed figures matter, confirm the current-year amount against IRS guidance before filing.
How does the SALT cap phase-out work?
Above a modified adjusted gross income threshold of roughly $500,000, the cap is reduced by 30 cents for every dollar of income over the threshold, but it never falls below $10,000. This creates a band of income — broadly $500,000 to about $600,000 — where each additional dollar earned also shrinks your deduction, producing an unusually high effective marginal tax rate inside that range. Below the threshold, income does not affect your cap at all.
Does the higher SALT cap mean I should itemize now?
Only if your total itemized deductions now exceed your standard deduction. The standard deduction is large — roughly $32,000 for a married couple filing jointly — so SALT alone rarely clears it. The households the change genuinely flips are those combining high property taxes, a state income tax, and meaningful mortgage interest, typically in New Jersey, New York, Connecticut, Illinois, California, and Massachusetts. This calculator runs both sides so you can see which wins for you.
Can I deduct both state income tax and sales tax?
No. You elect one or the other, whichever is larger, and add it to your property tax to reach your total SALT. Income tax is bigger for most filers. If you live in a state with no income tax — Texas, Florida, Washington, Nevada, Tennessee, Wyoming, South Dakota, Alaska, or New Hampshire — you would elect sales tax instead, and the IRS publishes optional tables so you do not need to keep receipts.
Is the mortgage interest deduction limit still $750,000?
The $750,000 acquisition-debt limit set by the Tax Cuts and Jobs Act had been scheduled to revert to $1 million after 2025, and the 2025 legislation is understood to have made the $750,000 figure permanent instead. Interest is deductible only on debt used to buy, build, or substantially improve the home. Confirm your specific situation with a tax professional, particularly if you have a mortgage above that limit or a home equity loan.
Does the SALT cap increase expire?
Yes. Under current law the raised cap steps up by about one percent a year through 2029 and then reverts to $10,000 in 2030. That reversion is worth planning around if you are making a multi-year decision, such as prepaying property tax or timing a large charitable gift, since the value of itemizing changes materially at that point unless Congress acts again.