What Counts as SALT? Property Tax, Income Tax, and Sales Tax (2026)

SALT stands for State And Local Taxes, and it includes three components: state and local income tax (or general sales tax, but not both), plus real property tax. All three categories combine into a single total that is subject to the $40,400 cap on Schedule A for2026. Property taxes always count toward SALT, while you must choose between income tax and sales tax for the other component.

What counts as SALT?

The SALT deduction under IRC Section 164 includes these categories of taxes paid during the tax year:

• State and local income taxes. This includes state income tax withheld from paychecks (box 17 on your W-2), estimated state tax payments, and any state tax paid when filing the prior year's return. City and local income taxes (such as New York City income tax or Ohio municipal taxes) also count.
• General sales taxes (if elected instead of income tax). This is an either/or choice. You can deduct sales tax instead of income tax, but never both.
• Real property taxes. Property taxes on your home, land, and other real estate you own. These are always included in SALT regardless of whether you choose the income tax or sales tax election.

These three categories add together into a single SALT total. That total is then subject to the $40,400 cap (or $20,200 for MFS filers). If your total exceeds the cap, only the capped amount is deductible.

The income tax vs. sales tax election

You must choose one:

• Income tax election. Deduct the state and local income taxes you actually paid during the year. This is the default choice for most people in income-tax states because the amount is usually larger and easier to calculate (it appears on your W-2 and estimated payment records).
• Sales tax election. Deduct the general sales taxes you paid. You can use actual receipts or the IRS optional sales tax tables, which estimate your sales tax based on income, filing status, and state rates. You can add sales tax from major purchases (vehicles, boats, home building materials) on top of the table amount.

The election is made annually on Schedule A. You are not locked into the same choice every year. If your state changes its income tax rate or you make a large purchase in a given year, switching elections might produce a better result.

In practice, the income tax election produces a larger deduction for most taxpayers who live in states with an income tax. The sales tax election is primarily valuable for residents of states that impose no income tax.

Property tax: always included

Property taxes on real property are always part of SALT regardless of which election you make. If you own a home and pay $12,000 annually in property tax, that $12,000 counts toward your SALT total whether you also deduct income tax or sales tax.

Multiple properties count as well. If you own a primary residence and a vacation home, the property taxes on both contribute to your SALT total. However, property taxes on business or rental properties are deducted on Schedule C or Schedule E instead, not on Schedule A as part of SALT.

Personal property taxes (such as annual vehicle registration fees based on value) can also count toward SALT if they are based on the value of the property. Flat fees or fees based on weight do not qualify.

States with no income tax

Nine states impose no broad-based individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Taxpayers in these states typically elect the sales tax deduction because they have no state income tax to deduct.

For these filers, SALT consists of the sales tax amount (from tables or actual receipts) plus property taxes. A homeowner in Texas paying $15,000 in property tax and using the IRS sales tax table amount would add both figures together and compare the total to the $40,400 cap.

Taxpayers in no-income-tax states who rent rather than own may find that their SALT total is relatively small, consisting only of the sales tax table amount. Whether this makes itemizing worthwhile depends on whether total itemized deductions exceed the standard deduction of $16,100 (single) or $32,200 (MFJ).

How the cap applies to the total

The $40,400 cap applies to the combined SALT total, not to each component separately. There is no sub-cap for property taxes and no sub-cap for income taxes. The math is straightforward:

This taxpayer paid $42,000 in total SALT but can only deduct $40,400. The remaining $1,600 is not deductible. It does not matter how the $42,000 is split between income tax and property tax.

For taxpayers whose total SALT falls below the cap, the cap is irrelevant. The full amount is deductible on Schedule A.

What does not count as SALT

Several types of taxes are not deductible as SALT on Schedule A:

• Federal income tax. You cannot deduct federal taxes on your federal return.
• FICA taxes. Social Security and Medicare taxes withheld from wages are not deductible as SALT (the employer's share is deductible as a business expense by the employer).
• Foreign taxes. Taxes paid to foreign governments are claimed as a foreign tax credit or a separate itemized deduction, not as SALT.
• Fees and assessments. Sewer fees, trash collection charges, homeowner association dues, and special assessments for local benefits (sidewalks, curbs) are generally not deductible as taxes.
• Transfer taxes. Real estate transfer taxes paid when buying or selling a home are not SALT. They are added to the cost basis or reduce the sale proceeds.
• Estate and gift taxes. State estate taxes and gift taxes are separate from SALT.

To calculate your SALT total and check it against the cap, use the SALT cap calculator. For help deciding whether itemizing with SALT beats the standard deduction, see the standard vs. itemized deduction comparison.