SALT Cap Phase-Down
Tax Glossary Term
Definition
The SALT cap phase-down is a mechanism in the OBBBA that reduces the state and local tax (SALT) deduction cap for high-income taxpayers. For 2026, the base SALT cap is $40,400, but it begins phasing down when a taxpayer's Modified Adjusted Gross Income exceeds $505,000. The phase-down rate is 30.0% of MAGI above the threshold, meaning for every dollar over $505,000, the cap shrinks by 30.0% of that excess. The cap cannot fall below the floor of $10,000. A critical detail: the phase-down threshold of $505,000 is the same for single, head of household, AND married filing jointly filers (it is not doubled for joint returns). Only married filing separately has its own values: a cap of $20,200, a phase-down threshold of $252,500, and a floor of $5,000. This is a phase-down of the cap itself, not of the SALT deduction amount — the reduced cap still determines the maximum SALT you can deduct, and your actual deduction is the lesser of your SALT paid or the phased-down cap.
Example
MFJ filer, MAGI: $550,000
Phase-down threshold: $505,000
MAGI excess: $550,000 − $505,000 = $45,000
Phase-down: 30.0% × $45,000 = $13,500
Reduced cap: $40,400 − $13,500 = $26,900
Floor: $10,000 • reduced cap of $26,900 is still above the floor