If you are itemizing your deductions, you can report your state and local taxes (SALT). This refers to your state and local income taxes, or your state and local sales taxes. However, you cannot include both. You also cannot report the amount already reported on your W-2 statement. For additional information from the IRS, click here.
The SALT deduction has seen significant changes in recent years, primarily concerning the maximum amount taxpayers can claim on their federal tax return.
Pre-2018: Unlimited State and Local Tax Deduction
Before 2018, taxpayers could deduct an unlimited amount of state and local taxes from their federal taxable income if they itemized their deductions. There was no cap on this deduction.
2018–2024: The $10,000 Cap
Due to the Tax Cuts and Jobs Act (TCJA), the SALT deduction limit is $10,000 ($5,000 if married filing separately) for tax years 2018 through 2024. You can report state and local income taxes, real property taxes, and personal property taxes such as a boat or car if you itemize your deductions.
2025 – 2029
A new change is set to occur under the “One Big Beautiful Bill Act,” signed into law on July 4, 2025. This act temporarily raises the SALT deduction cap to $40,000 ($20,000 if married filing separately), effective for tax years 2025 through 2029.
Important Limitation: This higher cap does not apply to all taxpayers. If your Adjusted Gross Income (AGI) is $500,000 or higher, the deduction limit remains at the $10,000 cap.
The SALT deduction cap will revert to the original $10,000 limit after the 2029 tax year for all taxpayers, unless Congress intervenes to extend it.
