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SALT Deduction Calculator (2026)

US Policy 2026

Your state and local tax deduction under the $40,400 cap and high-income phase-down

The interactive calculator loads instantly on this page — the fields below show what it asks for.

For seven years, homeowners in high-tax states lived with a hard $10,000 ceiling on deducting state and local taxes. The One Big Beautiful Bill Act quadrupled it — the cap is $40,400 for 2026 ($20,200 married filing separately), rising 1% a year before snapping back to $10,000 in 2030. But there's a trap built into the design: once modified AGI passes $505,000, the cap shrinks by 30 cents for every extra dollar of income, bottoming out at the old $10,000 around $606,000 MAGI. Commentators call the resulting spike in effective marginal rates the "SALT torpedo." This calculator handles the whole mechanism. Enter your state income (or sales) tax, property tax, filing status, and MAGI, and it returns your effective cap, your actual deduction, the tax value at your bracket, and how much you gained versus the old limit — or whether the phase-down quietly took the benefit back.

Why the SALT Deduction Numbers Matter

Whether this change is worth $0 or $9,000+ to you depends on three things: whether you itemize at all (the 2026 standard deduction is $32,200 joint / $16,100 single, a high bar), how much SALT you genuinely pay, and where your MAGI sits relative to $505,000. A New Jersey couple paying $32,000 in combined state and property tax with a $350,000 MAGI gains thousands; the same couple at $620,000 MAGI gains nothing over the old law. Because the phase-down operates like a 30% surtax on income in the $505,000–$606,000 band, timing income — bonuses, capital gains, Roth conversions — around that window is one of the more valuable planning moves available before the 2030 sunset.

The Formula, Explained

Effective Cap = max($10,000, $40,400 − 0.30 × (MAGI − $505,000)); Deduction = min(SALT Paid, Effective Cap)

Add up your deductible state and local taxes — income tax withheld and estimated payments (or general sales tax instead, your choice), plus property taxes on your homes. Compare the total to your effective cap: $40,400 flat if MAGI is at or below $505,000, otherwise reduced by 30% of the excess with a $10,000 floor. Married-filing-separately figures are exactly half at every step. Your federal saving equals the deduction times your marginal bracket, assuming you itemize.

How to Use It: Step by Step

  1. Add up state and local income tax. W-2 box 17 state withholding, local withholding, plus any estimated payments made during the year. Alternatively substitute general sales tax if you live in a no-income-tax state.
  2. Add property taxes. Real estate taxes actually paid in the year on your primary and any second home. Escrowed amounts count when the lender pays them, not when you fund escrow.
  3. Enter filing status and MAGI. Married filing separately halves the cap, threshold, and floor. MAGI determines whether the phase-down bites.
  4. Check the cap and threshold defaults. The 2026 figures ($40,400 / $505,000) are pre-filled. Both rise 1% annually through 2029 — edit them for other years.
  5. Compare against itemizing. The deduction only helps if your total itemized deductions beat the standard deduction. The result shows your gain versus the old $10,000 cap to make that comparison easier.

Worked Examples with Real Numbers

New Jersey couple under the threshold

Combined state income tax of $19,500 and property tax of $12,800; MAGI $320,000, filing jointly, 32% bracket.

Inputs: State income tax: $19,500 · Property tax: $12,800 · MAGI: $320,000

Calculation: SALT paid = $32,300, below the $40,400 cap with no phase-down. Versus the old $10,000 cap, they deduct an extra $22,300.

Result: Full $32,300 deduction. The extra $22,300 over the old law is worth about $7,136 at 32% — the headline case the law was written for.

Executive in the phase-down band

$38,000 total SALT paid; MAGI $560,000, joint, 35% bracket.

Inputs: SALT paid: $38,000 · MAGI: $560,000

Calculation: MAGI exceeds $505,000 by $55,000 → cap reduced by 30% × $55,000 = $16,500. Effective cap = $40,400 − $16,500 = $23,900.

Result: Deduction limited to $23,900 despite paying $38,000. Still $13,900 better than the old cap (~$4,865 at 35%), but each additional dollar of income in this band costs 30¢ of deduction on top of normal tax.

Fully phased down

California single filer, $27,000 SALT paid, MAGI $620,000, 35% bracket.

Inputs: SALT paid: $27,000 · MAGI: $620,000

Calculation: Reduction would be 30% × $115,000 = $34,500, far past the cap — the $10,000 floor applies.

Result: Deduction is $10,000, identical to the old law. For incomes above roughly $606,300, the 2026 SALT expansion delivers nothing.

Mistakes People Actually Make

  • Forgetting you must itemize. With a $32,200 joint standard deduction in 2026, plenty of households with $15,000–$20,000 of SALT still come out ahead taking the standard deduction.
  • Double-counting income and sales tax. You deduct state income tax OR general sales tax, never both.
  • Ignoring the phase-down when timing income. A bonus or Roth conversion that pushes MAGI from $500,000 to $560,000 doesn't just add tax — it strips $16,500 of SALT deduction.
  • Assuming the cap is permanent. It reverts to $10,000 for tax years beginning in 2030, which matters for multi-year planning like prepaying property taxes.
  • Missing that AMT can neutralize SALT. State and local taxes aren't deductible under the alternative minimum tax, so AMT payers may see no benefit from the higher cap.

Tips Worth Knowing

  • If your MAGI sits just above $505,000, pre-tax retirement contributions or deferring income can claw back 30¢ of deduction per dollar removed.
  • Bunch deductions: pay January's property tax installment in December of a year you itemize to concentrate SALT into one tax year.
  • Business owners in pass-through entities: many states offer PTET elections that shift state tax to the entity level, bypassing the personal cap entirely — ask your CPA.
  • The window is 2025–2029. If you've deferred deductions under the old $10,000 regime, these are the years to use them.
  • Keep receipts for large purchases if you use the sales tax option — a car or home renovation can push actual sales tax above the IRS tables.

Frequently Asked Questions

What is the SALT deduction cap for 2026?

$40,400 for single, joint, and head-of-household filers, and $20,200 for married filing separately. The cap rises 1% a year through 2029, then reverts to $10,000 in 2030.

How does the SALT phase-down work?

Above $505,000 of modified AGI ($252,500 MFS), the cap falls by 30% of the excess income, but never below $10,000. It's fully phased down at roughly $606,300 MAGI, where you're back to the old-law cap.

Do I have to itemize to use the SALT deduction?

Yes — SALT is a Schedule A itemized deduction. Your total itemized deductions (SALT, mortgage interest, charity, etc.) must exceed the standard deduction — $32,200 joint or $16,100 single in 2026 — for it to matter.

What counts as SALT?

State and local income taxes (or general sales taxes instead), real estate taxes, and personal property taxes like vehicle ad-valorem tax. Federal taxes, HOA fees, and assessments for local improvements don't count.

Is the $40,400 cap per person or per return?

Per return. A married couple filing jointly shares one $40,400 cap; filing separately gives each spouse $20,200 with a $252,500 phase-down threshold — separate filing rarely helps here.

Why is it called the SALT torpedo?

In the $505,000–$606,000 MAGI band, each extra dollar of income triggers both normal tax and a 30¢ deduction loss. At a 35% bracket that pushes the effective marginal rate above 45%, a spike that can sink the value of a raise or bonus — hence the nickname.

The 2026 SALT rules are generous in the middle and stingy at both ends: below the itemizing threshold you gain nothing, above $606,000 MAGI you gain nothing, and in between the benefit can reach several thousand dollars a year. Work out where you land, watch the $505,000 line when timing income, and use the higher cap while it lasts — the clock runs out after 2029.

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