What it is
The SALT deduction permits individual taxpayers to subtract certain state and local taxes, including income, sales, and property taxes, when calculating their federal taxable income. Historically, there was no cap on this deduction. However, the Tax Cuts and Jobs Act of 2017 imposed a $10,000 limit on the total amount of state and local taxes that can be deducted, impacting taxpayers in high-tax states.
The cap on the SALT deduction has been a contentious political issue, particularly for residents and politicians in high-tax states. Efforts to repeal or modify the cap frequently appear in legislative proposals, especially during budget negotiations. Changes to the SALT cap can significantly affect the federal tax burden for many middle- and high-income earners, influencing real estate markets and state fiscal policies.
Why it matters
The SALT deduction cap directly affects your federal tax liability, especially if you live in a high-tax state, influencing your disposable income.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice