Disclaimer: This article is for educational purposes only and is not tax, legal, or financial advice. Tax rules change periodically, always check current IRS guidance or consult a qualified tax professional.
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Quick Answer: SALT Deduction Cap 2026
For tax year 2026, the SALT deduction cap is $40,400 for single, head of household, MFJ, and qualifying surviving spouse filers. Married filing separately is half that, at $20,200. The cap covers the combined total of state and local income (or sales) tax, real estate property tax, and personal property tax on Schedule A.
Two strings attached. Above $505,000 MAGI ($252,500 MFS), the cap drops by 30 cents per dollar of excess MAGI, with a floor of $10,000 ($5,000 MFS). The expanded cap reverts to a flat $10,000 in tax year 2030 unless Congress extends it.
The bigger cap only matters if it flips your itemize-vs-standard decision against the 2026 standard deduction ($16,100 single/MFS, $24,150 HOH, $32,200 MFJ). Use the Tax Calculator US app to see how the cap affects your federal liability before you file.
Key Takeaways
- The 2026 SALT cap is $40,400 for most filers and $20,200 for MFS, up from $10,000 / $5,000 under TCJA. The change comes from P.L. 119-21 Sec. 70120, which amended IRC Sec. 164(b)(6) and added Sec. 164(b)(7).
- The phase-down begins at $505,000 MAGI ($252,500 MFS) and reduces the cap by 30% of MAGI excess, never below $10,000. The cap is fully squeezed back to $10,000 at $606,333.33 MAGI for most filers.
- The cap covers a combined total. State and local income (or sales) tax plus real estate tax plus personal property tax all share the same $40,400 ceiling, which limits how much of your true SALT bill you can actually write off.
- Itemizing only beats the standard deduction when SALT plus mortgage interest plus charitable gifts plus medical (over 7.5% AGI) clears $16,100 single, $24,150 HOH, or $32,200 MFJ.
- The expanded cap sunsets after 2029. It's indexed at 1% per year ($40,804 in 2027, $41,212 in 2028, $41,624 in 2029), then drops back to a flat $10,000 in 2030 if Congress doesn't act.
- PTET still works. OBBBA did not eliminate state pass-through entity tax workarounds for partnership and S-corp owners, and they often beat the individual cap once MAGI is over the phase-down threshold.
What the SALT Deduction Cap Is in 2026
The state and local tax (SALT) deduction lets itemizers subtract certain state and local taxes from their federal taxable income on Schedule A. Three categories share the cap:
- State and local income tax (or, if you elect, general sales tax, but not both)
- State and local real estate property tax on your home and other real property
- State and local personal property tax (typically vehicle registration value-based fees)
Foreign real estate taxes are out under TCJA. Federal taxes never qualified.
The four numbers a 2026 reader needs
| Item | Most filers | Married filing separately |
|---|---|---|
| SALT cap | $40,400 | $20,200 |
| MAGI phase-down threshold | $505,000 | $252,500 |
| Phase-down rate | 30% of MAGI over the threshold | |
| Cap floor (after phase-down) | $10,000 | $5,000 |
Where the new cap came from
From 2018 through 2024, the Tax Cuts and Jobs Act capped SALT at $10,000 ($5,000 MFS). The One Big Beautiful Bill Act (P.L. 119-21), Sec. 70120, signed July 4, 2025, amended IRC Sec. 164(b)(6) and added IRC Sec. 164(b)(7) to raise the cap and add the MAGI-based phase-down. The change is effective for tax years beginning after December 31, 2024, so the 2025 cap is $40,000 and the 2026 cap is $40,400 (1% indexed).
The cap covers a combined total
This is where filers in NJ and IL get pinched. If you paid $18,000 in property tax and $14,000 in state income tax, your true SALT is $32,000, all deductible against the $40,400 cap. But pay $25,000 in property tax and $25,000 in state income tax, and you have $50,000 of true SALT and only $40,400 deductible. The cap is shared, not stacked.
How the MAGI Phase-Down Works (with Worked Examples)
Sec. 164(b)(7)(B) reduces the applicable SALT cap by 30 cents on every dollar of MAGI above the threshold, but never below the $10,000 floor. For 2026, MAGI for this purpose is your AGI plus amounts excluded under IRC Sec. 911 (foreign earned income), Sec. 931, and Sec. 933. For most domestic filers, MAGI equals AGI.
Three MFJ scenarios at a glance
- $480,000 MAGI: below the $505,000 threshold, so the full $40,400 cap applies. No phase-down.
- $600,000 MAGI: ($600,000 minus $505,000) times 30% equals $28,500 reduction. Cap = $40,400 minus $28,500 = $11,900.
- $650,000 MAGI: ($650,000 minus $505,000) times 30% equals $43,500 reduction, which would drop the cap below $10,000, so it clips at the floor. Cap = $10,000.
The number competitors leave out
Almost every article tells you the phase-down rate but doesn't compute the upper boundary. Solve for the MAGI at which the cap is fully squeezed back to the $10,000 floor:
$505,000 + ($40,400 - $10,000) / 0.30 = $505,000 + $101,333.33 = $606,333.33
So an MFJ couple at $606,333.33 MAGI or higher in 2026 effectively gets the same $10,000 cap that applied under TCJA. The OBBBA expansion buys you nothing in that range.
The phase-down corridor as a marginal tax cliff
Inside the corridor ($505,000 to $606,333), every extra $1,000 of MAGI costs you $300 of SALT cap. At a 35% federal marginal bracket, that's roughly $105 of extra federal tax per $1,000 of MAGI on top of the regular bracket. Roth conversions, capital gain harvesting, and bonus timing all need to be modeled with this in mind.
The 2025-2029 cap schedule
| Tax year | Cap (most filers) | Cap (MFS) | Phase-down threshold | MFS threshold |
|---|---|---|---|---|
| 2025 | $40,000 | $20,000 | $500,000 | $250,000 |
| 2026 | $40,400 | $20,200 | $505,000 | $252,500 |
| 2027 | $40,804 | $20,402 | $510,050 | $255,025 |
| 2028 | $41,212 | $20,606 | $515,151 | $257,575 |
| 2029 | $41,624 | $20,812 | $520,302 | $260,151 |
| 2030+ | $10,000 | $5,000 | (none, flat cap) | (none) |
Note the cliff. The cap doesn't index down. It snaps from $41,624 to $10,000 between 2029 and 2030 unless Congress extends the OBBBA expansion.
Who Actually Benefits (and Who Doesn't)
The bigger cap is irrelevant unless three conditions are all true. Run them in order.
Three filter tests
- Filing status. Single, HOH, MFJ, or qualifying surviving spouse get the full $40,400 cap. MFS gets exactly half ($20,200) and half thresholds.
- MAGI test. Under $505,000 = full $40,400. $505,000 to $606,333 = phased. Over $606,333 = $10,000 floor (no different from the old TCJA cap).
- Itemize test. Even with a $40,400 cap, SALT is irrelevant if total Schedule A deductions don't exceed your standard deduction ($16,100 / $24,150 / $32,200).
The realistic beneficiary profile
According to Tax Foundation analysis, the bottom 80% of earners see no benefit from the higher cap, the top 5% capture most of it, and the 95th-99th percentile group sees roughly a 0.6% after-tax income lift. About 9% of returns itemize post-TCJA. The higher cap nudges that up but doesn't move the needle for most filers.
The clearest winner is a high-tax-state homeowner with MAGI between $200,000 and $500,000, a property tax bill of $10,000 to $25,000, and meaningful state income tax withholding. Pre-OBBBA, this filer was capped at $10,000. In 2026, the same filer can deduct $20,000-$40,400 of true SALT, which often flips them from standard deduction to itemizing for the first time since 2017.
Who the cap doesn't help
- Renters with low SALT. If you don't own real estate and your state income tax is small, $10,000 was already plenty of headroom.
- Filers in TX, FL, TN, NV, WA, SD, WY, AK, NH with no state income tax. Property tax alone rarely clears the standard deduction unless you also have significant mortgage interest.
- MFJ filers above $606,333 MAGI. The phase-down has fully clawed back the expansion.
- Anyone whose Schedule A total still trails the 2026 standard deduction. The cap is a ceiling, not a floor.
Itemize vs. Standard Deduction in 2026 (Break-Even Math)
The 2026 standard deduction was set in Rev. Proc. 2025-32: $16,100 single/MFS, $24,150 HOH, $32,200 MFJ. Itemize only when:
SALT (capped at $40,400) + mortgage interest + charitable gifts (above 0.5% AGI floor) + medical (above 7.5% AGI floor) > standard deduction
For most readers, SALT and mortgage interest are the two big drivers. Here's how the math plays out for an MFJ couple under the full $40,400 cap.
MFJ break-even table (full cap, $32,200 standard deduction)
| Property tax | State income tax | Pre-cap SALT | SALT after cap | Other itemizables to clear $32,200 |
|---|---|---|---|---|
| $5,000 | $5,000 | $10,000 | $10,000 | $22,200+ |
| $10,000 | $10,000 | $20,000 | $20,000 | $12,200+ |
| $15,000 | $15,000 | $30,000 | $30,000 | $2,200+ |
| $20,000 | $20,000 | $40,000 | $40,000 | $0 (already over) |
| $25,000 | $25,000 | $50,000 | $40,400 (capped) | $0 |
Single break-even table (full cap, $16,100 standard deduction)
| Property tax | State income tax | Pre-cap SALT | SALT after cap | Other itemizables to clear $16,100 |
|---|---|---|---|---|
| $5,000 | $5,000 | $10,000 | $10,000 | $6,100+ |
| $8,000 | $8,000 | $16,000 | $16,000 | $100+ |
| $10,000 | $10,000 | $20,000 | $20,000 | $0 |
| $15,000 | $25,000 | $40,000 | $40,000 | $0 |
The rule of thumb
If your true SALT is at or near $40,400 and you have any mortgage interest or charitable giving, itemizing wins for 2026 in almost every case below the phase-down. Pre-OBBBA, that same filer was capped at $10,000 and needed $22,200 of other itemizables (MFJ) to clear the standard deduction. Now $2,200 is plenty.
For the full worksheet including mortgage interest, the new 0.5% charitable floor, and the Sec. 70111 high-earner haircut, see Itemized vs. Standard Deduction in 2026.
Sunset, Planning Moves, and the PTET Workaround
The expanded cap is a four-year window, not a permanent fix. Plan accordingly.
The 2030 cliff
Per IRC Sec. 164(b)(7)(A)(iv), the cap reverts to a flat $10,000 ($5,000 MFS) for tax years beginning after December 31, 2029. There's no MAGI gating after the sunset. High earners are no worse off than middle earners, but everyone is back to the TCJA cap.
Planning moves for 2026-2029
- Time state estimated payments. If you're close to the cap in a given year, push the January state estimate into December (or the December estimate into January) so SALT lands in the year where it actually buys deductible room.
- Watch property tax prepayment rules. Some local jurisdictions accept prepayment of the next year's installment in December. Others don't. Check before December 31.
- Mind your MAGI. Inside the $505K-$606K phase-down corridor, every $1,000 of accelerated income (Roth conversions, large capital gains, deferred comp) costs $300 of SALT cap. A multi-year Roth conversion plan that stays under $505,000 MAGI per year preserves the full cap.
- Bunch deductions. If your true SALT is well under the cap, bunch property tax prepayment and charitable giving into alternating years to itemize one year and take the standard deduction the next. The new 0.5% AGI charitable floor makes bunching even more valuable.
PTET still works
About three dozen states (CA, NY, NJ, IL, CT, MA, OR, MD, and others) have enacted Pass-Through Entity Tax (PTET) regimes that let partnerships and S-corps elect to pay state income tax at the entity level. The entity deducts the state tax against business income, bypassing the individual SALT cap entirely.
Earlier House versions of OBBBA would have curtailed PTET for service businesses. The final enacted bill did not. PTET elections remain available, and they're often the deciding factor for partnership and S-corp owners with MAGI above the $505,000 phase-down threshold, since their individual cap is squeezed but the entity-level deduction isn't.
Model it before you commit
Whether to elect PTET, prepay property tax, or accelerate a Roth conversion all depend on your specific MAGI, filing status, and state mix. Use the Tax Calculator US app to model your 2026 federal liability under the new SALT cap before you decide. Pair it with our 2026 federal tax brackets guide to see the marginal value of every itemized dollar.
2026 SALT Cap Examples for High-Tax States
These examples apply 2026 rules from IR-2025-103 and P.L. 119-21 Sec. 70120. State income tax estimates assume top-marginal-rate withholding for the income level shown. Your actual numbers will vary with deductions and credits at the state level.
- Filers: Mark and Lisa, MFJ, $300,000 MAGI, Bergen County NJ
- Property tax (NJ effective rate ~2.23%): $18,000
- NJ state income tax: $12,000
- Pre-cap SALT: $30,000
- MAGI test: $300,000 is below the $505,000 threshold, so the full $40,400 cap applies
- SALT deducted: $30,000 (under the cap)
- Plus mortgage interest: $14,000
- Plus charitable gifts ($4,000 less 0.5% AGI floor of $1,500): $2,500
- Itemized total: $46,500
- Standard deduction (MFJ): $32,200
- Excess over standard: $14,300 at 24% marginal bracket = ~$3,432 in federal tax savings
- Decision: Itemize. Pre-OBBBA, capped SALT was $10,000 and this couple would have taken the standard deduction.
- Filers: Aisha and David, MFJ, $300,000 MAGI, SF Bay Area CA
- Property tax (Prop 13 freeze, ~0.75% effective): $8,000
- CA state income tax (top brackets at this income): $17,000
- Pre-cap SALT: $25,000
- MAGI test: Below $505,000, full $40,400 cap
- SALT deducted: $25,000 (under the cap)
- Plus mortgage interest: $22,000
- Plus charitable gifts ($6,000 less 0.5% AGI floor of $1,500): $4,500
- Itemized total: $51,500
- Standard deduction (MFJ): $32,200
- Excess over standard: $19,300 at 24% bracket = ~$4,632 in federal tax savings
- Decision: Itemize. The new cap is the difference. Under TCJA, capped SALT plus mortgage interest plus charity totaled about $36,500, only $4,300 over the standard deduction. The expansion roughly quadrupled the gap.
- Filer: Priya, single, $180,000 MAGI, Westchester NY
- Property tax (NY effective ~1.26%): $7,000
- NY state and city income tax: $7,000
- Pre-cap SALT: $14,000
- MAGI test: Below $505,000, full $40,400 cap
- SALT deducted: $14,000 (under the cap)
- Plus mortgage interest: $9,500
- Plus charitable gifts ($2,000 less 0.5% AGI floor of $900): $1,100
- Itemized total: $24,600
- Standard deduction (single): $16,100
- Excess over standard: $8,500 at 24% bracket = ~$2,040 in federal tax savings
- Decision: Itemize. Under TCJA, $10,000 of SALT plus the same mortgage interest and charity totaled $20,600, still over the (lower) 2024 standard deduction but with much less margin. The 2026 cap turns a marginal call into an obvious one.
- Filers: Rachel and Tom, MFJ, $600,000 MAGI, Cook County IL
- Property tax (IL effective ~2.08%): $14,000
- IL state income tax (4.95% flat): $26,000
- Pre-cap SALT: $40,000
- Phase-down math: ($600,000 minus $505,000) x 30% = $28,500 reduction
- Effective cap: $40,400 minus $28,500 = $11,900
- SALT deducted: $11,900 (capped)
- Plus mortgage interest: $20,000
- Plus charitable gifts ($10,000 less 0.5% AGI floor of $3,000): $7,000
- Itemized total: $38,900
- Standard deduction (MFJ): $32,200
- Excess over standard: $6,700, top dollars in the 35% bracket = ~$2,345 in federal tax savings
- Decision: Itemize, but the phase-down cost them roughly $28,500 of cap and about $9,975 of federal tax versus the same household at $300K MAGI. PTET would likely beat the cap if either spouse owns an Illinois pass-through entity.
- Filers: Marco and Elena, MFJ, $610,000 MAGI, Bay Area CA
- Pre-cap SALT (CA top-bracket income tax + property tax): $45,000
- Phase-down math: ($610,000 minus $505,000) x 30% = $31,500 reduction; cap would drop to $8,900, so it clips at the $10,000 floor
- Effective cap: $10,000 (no different from TCJA)
- SALT deducted: $10,000
- Plus mortgage interest: $30,000
- Plus charitable gifts ($8,000 less 0.5% AGI floor of $3,050): $4,950
- Itemized total: $44,950
- Standard deduction (MFJ): $32,200
- Excess over standard: $12,750 in the 35% bracket = ~$4,463 in federal tax savings
- Decision: Itemize, but the OBBBA expansion buys them nothing. They get exactly the $10,000 cap they'd have under the old rules. PTET (where their state allows it) is the only path to deduct more state tax.
Frequently Asked Questions
Tips for Getting the Most Out of the 2026 SALT Cap
- Stack your true SALT against the cap, not the other way around. Add up state and local income tax, property tax, and personal property tax for the year. If the total is under $40,400, the cap doesn't bite and you can deduct every dollar. If it's over, you've already lost the rest, so don't accelerate more SALT into a year you're already capped.
- Watch the $505,000 MAGI line carefully. Inside the phase-down corridor, every extra $1,000 of MAGI costs you $300 of cap. A multi-year Roth conversion plan, capital gain harvesting schedule, or RSU vesting calendar that keeps you under $505,000 each year preserves the full $40,400.
- Time your state estimated payments. If you're under the cap for 2026, push your January 2027 state estimate into December 2026 to land more SALT in the higher-cap year. If you're already capped for 2026 but expect a lower-MAGI 2027, defer the payment.
- Check whether your jurisdiction allows property tax prepayment. Some counties accept the next year's installment in December; others reject it. Where allowed, prepayment can clear the standard deduction without changing your true tax bill.
- Run the PTET numbers if you own a partnership or S-corp. In about three dozen states, PTET deducts state tax at the entity level and bypasses your individual cap. It's almost always preferable to the cap when MAGI exceeds $505,000.
- Model 2026 with the Tax Calculator US app. Plug in your MAGI, filing status, SALT, mortgage interest, and charitable gifts to see standard vs. itemized side-by-side under the new cap, the phase-down, and the 0.5% AGI charitable floor before you commit to any year-end moves.
References
- Public Law 119-21 (One Big Beautiful Bill Act) - Full Text — Statutory source for Sec. 70120, which amended IRC Sec. 164(b)(6) and added Sec. 164(b)(7) to raise the SALT cap and create the MAGI-based phase-down.
- IRS: 2026 Tax Inflation Adjustments (IR-2025-103) — Official IRS announcement of all 2026 inflation-adjusted figures, including the standard deduction, the SALT cap, and the phase-down threshold under OBBBA.
- IRS Topic No. 503 - Deductible Taxes — Authoritative explanation of which state and local taxes are deductible on Schedule A, including the income-vs-sales-tax election and the property tax category.
- IRS Schedule A (Form 1040) Instructions — Line-by-line instructions for claiming state and local tax, real estate tax, and personal property tax under the SALT cap.
- Tax Foundation: SALT Deduction Cap Increase Proposal - Details and Analysis — Independent distributional analysis of the OBBBA SALT cap, including the share of benefits captured by the top 5% and the after-tax income effect by income decile.
- Tax Foundation: Property Taxes by State and County, 2026 — Effective property tax rates by state, used in the NJ, IL, NY, and CA worked examples in this article.
- Kitces: Pass-Through Entity Tax (PTET) SALT Cap Workarounds — Detailed coverage of state-level PTET regimes that let partnerships and S-corps deduct state tax at the entity level, bypassing the individual cap.