SALT Cap Calculator — $40,000 Under OBBBA
The OBBBA quadrupled the state and local tax deduction cap. See your real cap (with the $500k phase-out) and how much extra you can deduct.
⚠️ This calculator provides estimates for informational and educational purposes only. It is not tax advice. Results are based on the One Big Beautiful Bill Act (OBBBA) and IRS Schedule 1-A. Consult a qualified tax professional for your specific situation.
What Changed: $10,000 → $40,000
Since 2018, taxpayers in high-tax states have been stuck deducting at most $10,000 of state income and property taxes. The OBBBA lifted that to $40,000 for 2025, growing ~1% yearly through 2029 before reverting in 2030.
- • 2025 cap: $40,000
- • 2026 cap: $40,400 (1% growth)
- • Phase-out: starts $500,000 MAGI ($250,000 MFS), $100 down per $1,000 over
- • Floor: never below $10,000; reverts to $10,000 permanently in 2030
Worked Example: California Couple
A married couple in California with $280,000 MAGI pays $18,000 state income tax and $12,000 property tax — $30,000 SALT total.
- • Under the old $10,000 cap: they deducted $10,000
- • Under the OBBBA $40,000 cap (no phase-out at this MAGI): they deduct the full $30,000
- • Extra deduction: $20,000 → at 24% bracket, $4,800/year back
That is the single biggest line-item win in the entire bill for high-tax-state homeowners.
The Phase-Out Cliff at $500,000
High earners lose the expanded cap progressively — $100 per $1,000 of MAGI over $500,000:
| MAGI | Your 2025 SALT cap |
|---|---|
| $500,000 or less | $40,000 |
| $550,000 | $35,000 |
| $600,000 | $30,000 |
| $700,000 | $20,000 |
| $800,000+ | $10,000 (floor) |
Planning note: OBBBA above-the-line deductions (overtime, tips, senior, car loan) lower AGI first — a $500k+ earner with big overtime can sometimes duck back under the threshold.
Itemize vs Standard Deduction: Check Both
SALT only matters if you itemize. With the 2025 standard deduction at $31,500 (MFJ), a couple needs SALT + mortgage interest + charitable gifts above that to win by itemizing. The OBBBA also introduced a $40,000 charitable deduction for standard-deduction filers (0.5% of AGI floor), which changes the math for generous households.
Frequently Asked Questions
What is the new SALT cap under the OBBBA?
For 2025, the state and local tax (SALT) deduction cap rose from $10,000 to $40,000. It grows about 1% per year through 2029 ($40,400 for 2026), then reverts to $10,000 in 2030 unless extended.
Who benefits from the higher SALT cap?
Taxpayers in high-tax states — California, New York, New Jersey, Connecticut — whose state income tax plus property tax exceeds $10,000. Roughly the deduction above $10,000 is new money on the table. Households under $10,000 of SALT payments see no change.
How does the $500,000 phase-out work?
Above $500,000 MAGI, the cap drops $100 for every $1,000 of income over the threshold, down to a floor of $10,000. At $600,000 MAGI the cap is $30,000; at $790,000+ it is back to $10,000. Note the married-filing-separately threshold is $250,000.
Which taxes count toward the SALT deduction?
State and local income taxes (or sales taxes if you elect that instead), plus real property taxes and personal property taxes — capped combined. The OBBBA also added a dedicated $40,000 charitable deduction path for households claiming the standard deduction, which is separate.
Do I need to itemize to use the SALT cap?
Yes — SALT is an itemized deduction. With the OBBBA standard deduction at $15,750/$31,500 for 2025, run both paths: many households with SALT under ~$25,000 still do better on the standard deduction.
Does the higher SALT cap interact with the other OBBBA deductions?
The overtime, tips, senior, and vehicle-interest deductions are above-the-line adjustments — they apply whether or not you itemize. SALT is itemized-only, but the above-the-line deductions lower AGI, which can pull a high earner back under the $500,000 SALT phase-out threshold.