QUESTION:
What is a SALT deduction?
ANSWER:
The SALT deduction allows taxpayers who itemize deductions to subtract state and local taxes (SALT) from their federal taxable income. This includes property taxes, state income taxes (or sales taxes if you elect that option), and certain other local taxes.
Under current law (OBBBA), the deduction is capped at $40,400 for 2026 (up from the previous $10,000 limit). It benefits only those whose total itemized deductions exceed the standard deduction. The higher cap is temporary through 2029 and phases down for high-income earners.
SALT can provide significant tax savings for homeowners and residents in high-tax states, but its value depends on your overall tax situation. Consult your tax professional to discuss in more detail.