SALT Deduction

Category: tax

A federal tax deduction for taxes paid to state and local governments.

SALT includes your state income taxes, your local sales taxes, and your local property taxes. There is currently a $10,000 cap on how much of these you can deduct on your federal return. This creates massive friction for residents of high-tax states like New York or California.

Common Examples

• Because of the $10,000 SALT cap, the taxpayer realized they could no longer write off the entirety of their high local property taxes.
• We advise clients in high-tax regions to model the SALT cap impact when deciding whether to itemize or take the standard deduction.