If you live in a high-tax state, the 2026 tax year offers more room to deduct state and local taxes than you’ve had in years. Here’s how the higher limit works and how to make the most of it before year-end.
What Is the SALT Deduction?
The state and local tax (SALT) deduction lets you subtract certain taxes you pay to state and local governments from your federal taxable income. You claim it on Schedule A (Form 1040), which means you must itemize rather than take the standard deduction.
Qualifying taxes include:
- State and local income taxes, or general sales taxes (you choose one, not both)
- Real estate property taxes on your primary and secondary residences
- Certain personal property taxes, such as value-based vehicle registration fees
Why the Limit Matters Now
From 2018 through 2024, the Tax Cuts and Jobs Act capped the SALT deduction at $10,000. That hit homeowners and residents of high-tax states especially hard, since property taxes alone often passed that figure.
The One Big Beautiful Bill Act (OBBBA) raised the cap to $40,000 for 2025, then adds 1% per year through 2029. For 2026, the limit is $40,400. The increase is temporary: in 2030, the cap is scheduled to return to $10,000.
| Filing Status | 2026 Max SALT Deduction | Income Phaseout Threshold (MAGI) |
|---|---|---|
| Single | $40,400 | Begins at $505,000 |
| Married Filing Jointly | $40,400 | Begins at $505,000 |
| Head of Household | $40,400 | Begins at $505,000 |
| Married Filing Separately | $20,200 | Begins at $252,500 |
*Note: For incomes exceeding the threshold, deductions phase down by 30% of excess MAGI, with a permanent floor of $10,000 ($5,000 for married filing separately).
Should You Itemize or Take the Standard Deduction?
You’ll generally want whichever is larger. For 2026, the standard deduction is:
- $16,100 for single filers
- $32,200 for married couples filing jointly
Itemized deductions can include SALT, charitable contributions, and qualifying medical expenses. According to IRS data for tax year 2023, about 90% of taxpayers took the standard deduction. With the higher SALT cap, though, homeowners and others with large state and local tax bills may find itemizing pays off.
Who Benefits Most?
The higher cap helps most if you:
- Live in a high-tax state such as California, New York, New Jersey, Connecticut, or Illinois
- Own a home with substantial property taxes, especially if your bill used to blow past $10,000
- Are close to the itemizing tipping point, since a larger SALT deduction makes it easier to beat the standard deduction
4 Steps to Make the Most of Your SALT Deduction
- Add up your eligible taxes. Gather your property tax bills and state and local income tax payments. Compare that total against your state’s sales tax deduction, since the better choice depends on your situation.
- Compare itemizing with the standard deduction. Add your SALT deduction to charitable gifts, eligible medical expenses, and other itemized deductions. If the total beats your standard deduction, itemize.
- Plan before December 31. If you expect large state income tax payments or property tax bills, talk with a tax professional now about timing while you can still act.
- Check the income limits. If your MAGI is above the threshold for your filing status, your deduction may be reduced.
What to Keep in Mind
The IRS hasn’t released detailed data on SALT claims for tax year 2025. Early analysis suggests taxpayers in high-tax states like California and New Jersey saw larger refunds in the 2026 filing season. A bigger refund doesn’t prove the SALT deduction was the cause, since withholding, credits, and other changes in your finances also affect it.
Get Help Maximizing Your SALT Deduction
Your savings depend on your income, your expenses, and your overall tax picture. Contact Huckabee CPA for a free consultation to find out which expenses qualify, whether income limits affect you, and how to pair your SALT deduction with other available tax breaks.
