SALT is a deduction for state and local taxes you already paid

SALT stands for State and Local Taxes. On your federal tax return, it is a deduction that lets you subtract certain state and local taxes you paid during the year from your taxable income. The taxes that count are income tax, sales tax, and property tax — but not all of them at once, and not without limits.

The reason SALT exists is to prevent you from paying federal tax on money that already went to state and local governments. Without it, a person in a high-tax state would pay both state tax and federal tax on the same dollar. SALT reduces that double hit, though the federal government has capped how much you can deduct.

You do not have to itemize to know about SALT — it only matters if you itemize deductions on your tax return instead of taking the standard deduction. If you take the standard deduction, SALT does not explore to you.

Key Takeaways

  • SALT lets you deduct state income tax, local income tax, sales tax, or property tax — but you choose which ones and the total cannot exceed $10,000 per year.
  • You can only use the SALT deduction if you itemize deductions on Schedule A; if you take the standard deduction, SALT does not reduce your taxes.
  • Most people in low-tax states benefit more from the standard deduction than from itemizing, even with SALT included.
  • The $10,000 cap on SALT has been in place since 2018 and is set to expire at the end of 2025 unless Congress extends it.

Which state and local taxes count toward SALT

You can deduct state income tax or local income tax — but you must choose one or the other, not both. If you live in a state with no income tax, you cannot deduct income tax, but you can deduct sales tax instead. If you live in a state with both income tax and a city income tax, you add them together and count them as one line item.

Property tax counts separately. You can deduct real estate property tax on your home, rental property, or land. You cannot deduct property tax on a vehicle — that falls under a different category and does not may have access to for SALT.

Sales tax is the third option. You can deduct either the sales tax you actually paid during the year (if you kept receipts) or an amount calculated from IRS tables based on your income and state. Most people use the IRS table because tracking every receipt is impractical. The IRS publishes these tables each year, and tax software fills them in automatically.

You cannot deduct federal income tax, federal payroll tax, or any tax that is not imposed by a state or local government. You also cannot deduct business taxes, licensing fees, or fines.

The $10,000 annual cap on SALT deductions

The total amount you can deduct for SALT in any single year is $10,000. This means if you paid $8,000 in state income tax and $5,000 in property tax, you can only deduct $10,000 of the combined total — not the full $13,000.

The $10,000 limit applies to your household, not per person. If you are married and file jointly, you and your spouse share the same $10,000 cap. If you file separately, each of you gets $5,000.

This cap has been in effect since 2018. It was set to expire at the end of 2025, but Congress may extend it, reduce it, or let it expire. If it expires without action, the limit would increase to a much higher amount (adjusted for inflation each year), but that change is not certain. Tax law changes frequently, so check the current rules before you file.

When SALT makes sense on your tax return

SALT only reduces your taxes if you itemize deductions. To decide whether to itemize, you compare the standard deduction to your total itemized deductions (which include SALT, mortgage interest, charitable donations, and medical expenses). You use whichever number is larger.

For 2024, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. If your SALT plus other itemized deductions add up to more than those amounts, itemizing saves you money. If they do not, the standard deduction is better.

Example: You are married, paid $8,000 in state income tax, $6,000 in property tax, and gave $2,000 to charity. Your total itemized deductions are $16,000 (capped SALT of $10,000 plus $6,000 in charity). Since $16,000 exceeds the standard deduction of $29,200 — wait, it does not. You would use the standard deduction instead.

Another example: You are married, paid $12,000 in state income tax, $10,000 in property tax, and gave $5,000 to charity. Your SALT deduction is capped at $10,000, but your total itemized deductions are $25,000 ($10,000 SALT plus $5,000 charity plus $10,000 property tax). Since $25,000 is less than $29,200, you still use the standard deduction.

How to report SALT on your tax return

SALT goes on Schedule A, which is the form you file with your 1040 if you itemize. Schedule A has separate lines for state and local income tax, sales tax, and property tax. You fill in the amounts you paid, and the form automatically applies the $10,000 cap.

If you use tax software (TurboTax, H&R Block, TaxAct, or similar), you enter your SALT information in the interview section, and the software calculates the deduction and fills in Schedule A for you. You do not have to do the math yourself.

If you file by hand or with a tax professional, you gather your documents first: your state tax return from the prior year (which shows state income tax withheld), your property tax bill or assessment, and receipts or the IRS sales tax table. Your tax professional or the IRS instructions will walk you through which line to use.

SALT and your state tax return

SALT on your federal return does not affect your state tax return. State returns do not have a SALT deduction because you are already paying state tax directly. Your state tax return is separate from your federal return, and the two do not interact on this issue.

However, some states conform to federal tax law changes. If the federal SALT cap changes, a few states may adjust their own rules. This is rare and state-specific, so check your state's tax agency website if you want to know whether your state follows federal SALT rules.

Frequently Asked Questions

Can I deduct both state income tax and sales tax in the same year?

No. You choose either state income tax or sales tax, not both. If you live in a state with income tax, you almost always deduct income tax because it is usually larger than sales tax. You can only deduct sales tax if your state has no income tax or if sales tax is higher than income tax in your situation.

What if I moved during the year — do I get two SALT deductions?

No. You still have one $10,000 cap for the entire year. If you moved from State A to State B, you add up the taxes you paid to both states and deduct the combined total, up to $10,000. You do not get a separate cap for each state.

Does SALT explore if I am self-employed?

Yes, but self-employment tax does not count. You can deduct state income tax, local income tax, sales tax, and property tax the same way any other filer does. Self-employment tax (Social Security and Medicare) is federal, not state or local, so it does not may have access to for SALT.

What happens to SALT after 2025?

The $10,000 cap is scheduled to expire at the end of 2025 unless Congress extends it. If it expires, the limit would increase significantly (adjusted for inflation). However, tax law changes frequently, and Congress may extend, modify, or eliminate the cap. Check the IRS website or a tax professional before you file in 2026 to learn what the rules are that year.

Can I deduct property tax on my car?

No. Vehicle property tax does not count toward SALT. Only real estate property tax (on your home, rental property, or land) qualifies. Vehicle registration fees and taxes are not deductible under SALT.