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SALT Deduction Cap Calculator 2026 - $40,400 Limit Under OBBBA

Free SALT cap calculator for 2026. The OBBBA raised the SALT deduction cap to $40,400 ($20,200 MFS). Calculate your deductible SALT, phase-down for high earners (AGI over $505,000), and see how much you lose to the cap.

Tax Year 2026Updated July 13, 2026

SALT Deduction Cap Calculator 2026: $40,400 Limit Under OBBBA

The One Big Beautiful Bill Act (OBBBA) raised the state and local tax (SALT) deduction cap from $10,000 to $40,400 for tax year2026. Married filing separately filers get a cap of $20,200. The cap is indexed annually for inflation. However, for high earners with AGI above $505,000, the cap reduces by 30% of the excess, with a floor of $10,000. Use the calculator below to see how much of your state and local taxes you can deduct.

How the SALT Cap Works Under the OBBBA

The Raised Cap

From 2018 through 2025, the SALT deduction was capped at $10,000 ($5,000 MFS) under the Tax Cuts and Jobs Act (TCJA). The OBBBA significantly raised this cap to $40,400 for 2026, indexed annually for inflation. This provides substantial relief for taxpayers in high-tax states who itemize deductions.

MFS Gets Half

Married filing separately filers receive a SALT cap of $20,200, exactly half of the standard cap. The phase-down AGI thresholds are also halved for MFS filers.

Phase-Down for High Earners

Taxpayers with adjusted gross income (AGI) above $505,000 see their SALT cap reduced by 30% of the MAGI excess over $505,000. The cap cannot go below $10,000($5,000 for MFS). Full phase-down occurs at approximately $606,333 AGI. The formula:

  • Excess: AGI − $505,000
  • Reduction: Excess × 30%
  • Effective cap: max($10,000, $40,400 − Reduction)

What Counts as SALT

The SALT deduction covers three categories of taxes:

  • State income tax (or state/local sales tax if you elect the sales tax option instead)
  • Local income or wage taxes (city, county, school district income taxes)
  • Property taxes on real property (your home, land, etc.)

All three categories are combined and subject to the single SALT cap. You must itemize deductions on Schedule A to claim the SALT deduction.

Worked Examples

Example 1: Under the Cap, Full Deduction

Profile: $15,000 total SALT paid, $200,000 AGI, single filer

SALT cap = $40,400
AGI $200,000 < phase-down threshold $505,000, no reduction
Effective cap = $40,400
SALT paid ($15,000) < cap ($40,400)
Deductible SALT = $15,000 (full amount, under cap)

Example 2: Over the Cap, Capped at $40,400

Profile: $60,000 total SALT paid, $300,000 AGI, single filer

SALT cap = $40,400
AGI $300,000 < phase-down threshold $505,000, no reduction
Effective cap = $40,400
SALT paid ($60,000) > cap ($40,400)
Deductible SALT = $40,400, $19,600 lost to cap

Example 3: Phase-Down Applies, High Earner

Profile: $80,000 total SALT paid, $555,000 AGI, single filer

Base SALT cap = $40,400
AGI $555,000 > phase-down threshold $505,000
Excess = $555,000 − $505,000 = $50,000
Reduction = $50,000 × 30% = $15,000
Effective cap = max($10,000, $40,400 − $15,000) = $25,400
SALT paid ($80,000) > effective cap ($25,400)
Deductible SALT = $25,400, $54,600 lost to cap

Frequently Asked Questions

What is the SALT cap for 2026?
The SALT deduction cap for 2026 is $40,400 for most filers (single, married filing jointly, head of household). Married filing separately filers have a cap of $20,200. This is a significant increase from the previous $10,000 cap that was in place from 2018–2025 under the TCJA.
What changed under the OBBBA?
The One Big Beautiful Bill Act (OBBBA) raised the SALT cap from $10,000 to $40,400 for 2026. The cap is indexed annually for inflation. However, for high-income taxpayers with AGI above $505,000, the cap phases down at a rate of 30% of excess MAGI. At approximately $606,333 AGI, it reaches the $10,000 floor.
How does the phase-down work for high earners?
If your AGI exceeds $505,000, the $40,400 cap is reduced by 30% of the excess over $505,000. The cap cannot go below $10,000 (the floor). For example, at $555,000 AGI, the excess is $50,000, the reduction is $15,000, and the effective cap is $25,400.
What counts as SALT (state and local taxes)?
SALT includes: (1) State income taxes (or state/local sales taxes if you elect that instead), (2) Local income taxes (city/county), and (3) Property taxes on real estate you own. Foreign taxes, fees, and assessments do not count. You must itemize deductions on Schedule A to claim the SALT deduction.
Do I need to itemize to claim the SALT deduction?
Yes. The SALT deduction is only available if you itemize your deductions on Schedule A. If your total itemized deductions (including SALT, mortgage interest, charitable contributions, etc.) are less than the standard deduction ($16,100 for single filers in 2026), it's generally better to take the standard deduction instead.
What is the MFS (Married Filing Separately) SALT cap?
Married Filing Separately filers have a SALT cap of $20,200, exactly half of the standard $40,400 cap. The phase-down thresholds are also halved for MFS filers.
Can I deduct sales tax instead of income tax?
Yes. You can choose to deduct either state and local income taxes or state and local sales taxes (but not both). This election is particularly beneficial for residents of states with no income tax (like Texas, Florida, or Washington) who pay significant sales taxes. The combined total is still subject to the SALT cap.
Is the SALT cap permanent?
The OBBBA's raised SALT cap is not permanent. The increased cap is set to expire and the specific future treatment depends on Congressional action. The cap is indexed annually for inflation during the effective period. For 2026, the indexed cap is $40,400.

SALT Cap Calculator

Deductible SALT$15,000

Of your $15,000 in state and local taxes, you can deduct $15,000 (under the $40,400 cap)

LineValue
Total SALT Paid$15,000
Base SALT Cap (your filing status)$40,400
Phase-down reduction (AGI-based)$0.00
Effective cap after phase-down$40,400
Deductible SALT$15,000
SALT lost to cap$0