The state and local tax (SALT) deduction lets itemizers write off state income taxes, local income taxes, and property taxes. Since 2018 it has been capped. The 2025 law temporarily raised that cap, and 2026 is the second year of the higher limit.
The 2026 cap
- SALT deduction cap for 2026: $40,400 (most filing statuses)
- Married filing separately: $20,200
- The cap rises about 1% per year: $40,000 (2025), $40,400 (2026), $40,804 (2027), $41,212 (2028), $41,624 (2029)
The high-income phase-down
The higher cap is not for everyone. If your modified AGI is above a threshold, your cap shrinks:
- 2026 threshold: $505,000 (single and joint); $252,500 for married filing separately
- The cap drops by 30 cents for every dollar of MAGI above the threshold
- It can never fall below $10,000 ($5,000 if MFS)
So only taxpayers with MAGI between roughly $505,000 and $672,000 see a partial reduction; above that, the cap is simply the $10,000 floor.
The 2030 cliff
This is temporary. Starting with the 2030 tax year the cap snaps back to $10,000 ($5,000 MFS), and the phase-down goes away. Congress could change that, but as written, the relief expires.
Numbers: a $530,000 MAGI joint filer
A married couple with $530,000 MAGI and $38,000 of eligible SALT in 2026:
- MAGI is $30,000 over the $500,000-ish threshold (using 2026's $505,000, it is $25,000 over)
- Reduction: 30% x $25,000 = $7,500
- Usable SALT cap: $40,400 - $7,500 = $32,900
- They deduct $32,900 of their $38,000 in state and local taxes; the rest is lost
Bunching deductible expenses into the 2025-2029 window can help high-tax households capture more of the temporary relief.
Disclaimer: This article is general educational information, not tax, legal, or investment advice. Dollar amounts come from the 2026 sources listed at the end of this article and may change. Before you act, talk to a licensed CPA, EA, or tax attorney about your own situation.