SALT Deduction Cap Quadruples to $40,000 for 2025 Tax Year

See who qualifies, how the new cap works, and whether itemizing could boost your tax savings.

Published on Feb. 12, 2026

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For the 2025 tax year, the state and local tax (SALT) deduction cap has quadrupled from $10,000 to $40,000. This change provides a significant tax break for homeowners in high-tax states, allowing them to deduct a wider range of non-federal taxes. The SALT deduction includes state and local income taxes, property taxes, and in some cases, sales taxes. However, the deduction is subject to a phase-out for high-income earners, and many taxpayers may still benefit more from the standard deduction.

Why it matters

The increase in the SALT deduction cap from $10,000 to $40,000 is a significant change that will provide substantial tax savings for homeowners in high-tax states, particularly those in the middle- to high-income range. This change aims to address the 'lower-income trap' and 'high-income trap' created by the previous $10,000 cap, which limited the usefulness of the deduction for many taxpayers.

The details

The SALT deduction allows taxpayers to deduct a variety of non-federal taxes, including state and local income taxes, property taxes, and in some cases, sales taxes. For the 2025 tax year, the cap on this deduction has been raised from $10,000 to $40,000 for single filers and married couples filing jointly. The deduction is subject to a phase-out for high-income earners, starting at $500,000 in income ($250,500 for married filing separately). However, even at higher income levels, taxpayers can still claim a minimum of $10,000 in SALT deductions.

  • The new $40,000 SALT deduction cap is in effect for the 2025 tax year, with taxes due on April 15, 2026.
  • The SALT deduction cap is scheduled to increase by 1% each year, along with the income phase-out threshold.
  • The expanded $40,000 cap is currently scheduled to remain in place through the 2029 tax year, with the deduction reverting to the old $10,000 limit in 2030 unless Congress acts.

The players

Robert Persichitte

A CPA and certified financial planner at Delagify Financial in Arvada, Colorado.

Committee for a Responsible Federal Budget

An organization that has analyzed the impact of the SALT deduction changes.

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What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

The significant increase in the SALT deduction cap from $10,000 to $40,000 will provide substantial tax savings for homeowners in high-tax states, particularly those in the middle- to high-income range. However, the deduction is still subject to a phase-out for the highest earners, and many taxpayers may still benefit more from the standard deduction depending on their specific circumstances.