The cap on the state and local tax (SALT) deduction was raised by the One Big Beautiful Bill Act. This is general information, not tax advice.
SALT deduction cap 2026: the $40,400 limit
For 2026 the cap is $40,400 under 26 U.S.C. 164(b)(7). It was $40,000 for 2025. The statute raises it 1% a year for 2027 through 2029, and it returns to $10,000 for 2030 and later. SALT means state and local income taxes (or sales taxes), real estate taxes and personal property taxes.
SALT cap $40,400 phase out and the $505,000 income limit
If modified AGI is above $505,000, the cap falls by 30 cents for each dollar over that line, but never below $10,000. The formula is the larger of $10,000 and $40,400 minus 0.30 times (MAGI minus $505,000). At $550,000 you are $45,000 over, the reduction is $13,500 and the cap is $26,900. The floor is reached at about $606,333. Do not mix years: the 2025 phase-down starts at $500,000, not $505,000.
SALT cap married filing separately 2026
Married people filing separately get half of everything: a $20,200 cap, a $252,500 threshold and a $5,000 floor. The floor is reached at about $303,167 of MAGI. A single filer, head of household and a joint return all use the full $40,400, so a joint return does not double it.
Should I itemize with the $40,400 SALT cap?
The SALT deduction only helps if you itemize, and itemizing only wins when your total beats the standard deduction: $16,100 single or married filing separately, $24,150 head of household and $32,200 married filing jointly for 2026 (IRS Revenue Procedure 2025-32). Example: a couple who paid $26,000 of state and local taxes plus $10,000 of mortgage interest has $36,000 itemized, which beats $32,200 by $3,800. Once the cap trims the SALT portion to $10,000, the same couple is at $20,000 and should take the standard deduction.
Try the SALT cap calculator → Related: senior bonus deduction.
Sources: 26 U.S.C. 164(b)(6)-(7) (law.cornell.edu); IRS Revenue Procedure 2025-32. Rules verified October 9, 2026.