What is the State and Local Sales Tax Deduction?

If you’re paying state and local taxes, known as SALT, you may be able to get some of that money back on your federal tax return with the SALT deduction. As long as you are taking the itemized deduction rather than taking the standard deduction, you may be eligible for the SALT tax deduction.

If you haven’t been able to claim much of your state and local taxes in previous years, you might be able to in the 2025 tax year. The One Big Beautiful Bill Act (OBBBA) temporarily increased the cap through tax year 2029, going from $10,000 for 2024 to $40,000 for 2025. The cap will continue to increase 1% each tax year through 2030, before reverting back to $10,000. If you’ve claimed the SALT deduction before, you could save even more over the next few years.

Now is the perfect time to learn more about this deduction so you can be prepared next time you file. Keep reading to learn more about the SALT deduction and how you can save on your taxes if you qualify.

Key takeaways

• The SALT deduction allows taxpayers to deduct state and local real estate taxes and personal property taxes, combined with either income taxes or sales taxes. 
• The SALT deduction can only be claimed if you’re itemizing instead of taking the standard deduction.
• The SALT cap has been increased to $40,000 for 2025. For tax years 2026 through 2029, it will increase 1% annually.
• After tax year 2029, the SALT cap increase will expire and is expected to return to $10,000.

What is the SALT deduction?

You can qualify for the state and local tax (SALT) deduction if you pay state and local taxes.

The SALT deduction has existed for more than a century. In 1913, the original federal tax code allowed taxpayers to claim itemized deductions for state and local taxes on their federal tax returns.

With the introduction of the Tax Cuts and Jobs Act (TCJA) in 2017, a few changes were made to the SALT deduction. The SALT cap was introduced, which is a limit on the amount you can deduct. The cap established by the TCJA applied to tax years 2018–2024.

On July 4, 2025, the OBBBA was passed with a provision to establish a new, increased SALT cap to $40,000 in 2025 with a 1% increase each year through tax year 2029. As of right now, it’s set to expire in tax year 2030 and revert back to $10,000.

There are three main categories of deductible taxes when it comes to the SALT deduction:

• Either state and local income taxes or state and local sales tax State and local real property taxes
• State and local personal property taxes

If you’re paying any of these state and local taxes, you can claim the amounts paid during the year as an itemized deduction on your tax return.

 Who can claim the SALT deduction?

Whether or not you can claim the SALT deduction depends on your circumstances. Your income and state of residence impacts the amount you pay in state and local taxes, so claiming the itemized SALT deduction isn’t always worth it.

However, keep in mind that you have to itemize your deductions in order to claim the SALT deduction on your return.

While some taxpayers benefit from itemized deductions, some people can save more by claiming the standard deduction. You can read up on taking the standard vs. itemized deduction to learn more about some of the key differences.

People in higher tax brackets often benefit more from the SALT deduction and itemized deductions. The more you pay in state and local taxes, the more you can save.

If you can claim more than $15,750 for single for 2025 ($14,600 in 2024), $31,500 for married filing joint for 2025 ($29,200 in 2024), or $23,625 for head of household for 2025 ($21,900 in 2024), in expenses, you can save by using Schedule A to claim the itemized deduction.

While taxpayers  in higher tax brackets or those that live in high property tax states often see the most benefit from the SALT deduction, the cap still imposes a strict ceiling. No matter how much you pay in state and local taxes, you can only claim so much on your tax return.

What’s included in the SALT deduction?

The SALT deduction can include sales and local taxes paid for:

• Income taxes: This can include state and local income taxes that have been withheld from your wages during the year, along with estimated tax payments, or payments made for a previous tax year If you receive a refund for the tax later on, it will be handled on the following year’s tax return. 
• Sales taxes: You can claim annual state and local general sales taxes on retail items for your SALT deduction. If you’re in a state or county where you pay sales tax every time you make a purchase, you can write that off. To calculate your sales taxes, you can use the IRS Sales Tax Deduction calculator. You can either claim the state income tax deduction or state sales tax deduction, but not both. Sales taxes are usually claimed by taxpayers residing in a state with no income tax.
• Real property taxes: Real property taxes, or real estate taxes, are those you’ve paid on any land or immovable structures you own, such as a house or building attached to the ground.
• Personal property taxes: This may include taxes that apply to movable personal  property such as a car, RV, or boat. The tax must be based on the value of the property and charged annually to be deductible.

The type of taxes you choose to claim will depend on your personal circumstances.

For example, income taxes might not even be a consideration for some. While most states have some form of income tax, and counties can impose additional taxes to help fund schools and other needs, there are states that have no state or local income tax, including:

• Alaska
• Florida
• New Hampshire
• Nevada
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

What taxes can’t be included in the SALT deduction?

There are certain types of taxes that can’t be deducted on Schedule A as itemized deductions, including:

• Federal income taxes
• Social Security taxes
• Transfer taxes
• Stamp taxes
• HOA fees
• Estate and inheritance taxes
• Service charges for water, sewer, or trash collection

If you’re not sure how best to determine your SALT deduction, you may want to speak with a tax expert who can look at your specific situation and help you maximize your tax savings.

Since the SALT deduction is an itemized deduction, you can claim it along with other itemized deductions and tax write-offs to lower your tax bill even more.

Why is there a SALT cap?

When the Tax Cuts and Jobs Act (TCJA) was introduced in 2017, several tax credits and deductions were affected, including the SALT deduction.

For tax year 2024 (the taxes paid in 2025), the SALT deduction was capped at a total of $10,000, or $5,000 for those filing as married filing separately. Now that the OBBBA has passed, the cap for tax year 2025 is $40,000 for those filing jointly and $20,000 for those filing separately.

For tax year 2026, the SALT cap is $40,400, and will increase by 1% for tax years 2027, 2028, and 2029.

You can also take advantage of other itemized deductions to reduce taxable income and save on your federal taxes. Working with a tax expert is the best way to make sure you’re claiming any and all deductions and credits you qualify for.

When does the cap expire?

The limit imposed by the TCJA took effect during the 2018 tax year and ended with the passing of the OBBBA. Once this temporary increase expires after tax year 2029, the deduction is expected to go back to the TCJA limit of $10,000.

Important reminders for claiming the SALT deduction

If you’re going to claim the SALT deduction, keep these reminders in mind:

• Make sure to keep records of the state and local tax payments that you’re writing off.
• You’ll have to decide between income or sales taxes when you claim this deduction. Real estate taxes and personal property taxes are separately deductible. However, your total deduction will be subject to the SALT limitation.
• You’ll typically only claim the SALT deduction if itemizing your deductions will save you more on your taxes than claiming the standard deduction. Add up all of your eligible expenses to help you make a decision.

If you have questions about itemizing or what expenses you can write off, a tax professional can help you maximize your deduction.

No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.