2021 SALT Deduction Limit
The 2021 SALT Deduction Limit is $10,000.
Effective 2021-01-01Source: 2021 Instructions for Schedule A (IRS)Verified 2026-08-29
Compared with 2020
Every figure on this page is unchanged from 2020.
| Item | 2020 | 2021 | Change |
|---|---|---|---|
| Deduction limit | $10,000 | $10,000 | +$0 (+0.0%) |
Who it applies to
Taxpayers who itemize deductions on Schedule A (Form 1040) and claim state and local taxes
What changed this year, and why
For tax year 2021, the deduction for state and local taxes (SALT) is limited to $10,000. This is the same limit that applied for 2020. The limit covers state and local income taxes (or sales taxes elected in place of income taxes), real property taxes, and personal property taxes reported on Schedule A of Form 1040. Married taxpayers filing separately are subject to a lower limit.
Common questions
- What taxes are subject to the SALT deduction limit?
- The SALT deduction limit covers state and local income taxes (or sales taxes in lieu of income taxes), real estate taxes, and personal property taxes reported on Schedule A.
- Is the limit different for married filing separately?
- Yes. Married taxpayers filing separately have a lower limit.
The limit shrinks above a stated income
The $10,000 cap applies to the combined total of state and local income (or sales) taxes, property taxes, and certain other levies. Once you reach that ceiling, any additional qualifying taxes paid in 2021 provide no further federal deduction. The limit applies regardless of how high your actual state and local tax bill may be.
The deduction for state and local taxes is generally limited to $10,000 ($5,000 if married filing separately).
2021 Instructions for Schedule A (IRS)
Income taxes or sales taxes, one or the other
When you itemize, you may deduct either state and local income taxes or state and local general sales taxes, but not both. The IRS instructions state that if you elect to deduct state and local general sales taxes instead of income taxes, you must check the box on line 5a of Schedule A. You then figure the sales tax amount using either your actual receipts or the optional sales tax tables provided by the IRS. This election is made on a year-by-year basis, so you can switch between the two options each tax season depending on which produces the larger deduction. However, the total deduction for state and local taxes - whether you choose income taxes or sales taxes, and regardless of which combination of property taxes and other qualifying levies you include - remains subject to the overall cap of $10,000 for 2021. Taxpayers in states with no income tax often benefit from choosing the sales tax option, while those in high-income-tax states typically find the income tax deduction more advantageous.
If you elect to deduct state and local general sales taxes instead of income taxes, you must check the box on line 5a.
2021 Instructions for Schedule A (IRS)
What is not a deductible tax
Not every tax you pay qualifies as a deductible state or local tax on Schedule A. The IRS explicitly lists several categories of taxes that cannot be deducted, regardless of whether you itemize. These include federal income taxes and most federal excise taxes; social security, Medicare, federal unemployment (FUTA), and railroad retirement (RRTA) taxes; customs duties; and federal estate and gift taxes. In addition, certain state and local levies are nondeductible, such as taxes on gasoline, car inspection fees, assessments for sidewalks or other property improvements, taxes you paid on behalf of someone else, and various license fees like marriage, driver's, and pet licenses. Foreign personal or real property taxes also do not count toward the SALT deduction. Only the specific state and local income, sales, and property taxes described elsewhere in the instructions qualify, and even those are subject to the $10,000 overall limit.
Taxes You Can't Deduct • Federal income and most excise taxes. • Social security, Medicare, federal unemployment (FUTA), and railroad re- tirement (RRTA) taxes. • Customs duties. • Federal estate and gift taxes. How- ever, see Line 16, later, if you had in- come in respect of a decedent. • Certain state and local taxes, in- cluding tax on gasoline, car inspection fees, assessments for sidewalks or other improvements to your property, tax you paid for someone else, and license fees (for example, marriage, driver's, and pet). • Foreign personal or real property taxes.
2021 Instructions for Schedule A (IRS)
Payroll contributions that do count
While most payroll deductions for social insurance programs are nondeductible, mandatory contributions to certain state-run benefit funds are an exception and count toward your state and local tax deduction. The IRS instructions specifically identify mandatory contributions to the California, New Jersey, or New York Nonoccupational Disability Benefit Fund, the Rhode Island Temporary Disability Benefit Fund, and the Washington State Supplemental Workmen's Compensation Fund as deductible state taxes. In addition, mandatory contributions to the Alaska, California, New Jersey, or Pennsylvania state unemployment funds qualify, as do mandatory contributions to state family leave programs such as the New Jersey Family Leave Insurance program and the California Paid Family Leave program. These amounts are reported on Schedule A as part of your state and local income taxes, and they count toward the overall $10,000 cap along with all other qualifying state and local taxes. Voluntary contributions to similar funds, however, do not qualify.
Mandatory contributions you made to the California, New Jersey, or New York Nonoccupational Disability Bene- fit Fund, Rhode Island Temporary Disa- bility Benefit Fund, or Washington State Supplemental Workmen's Compensation Fund.
2021 Instructions for Schedule A (IRS)
You only get this if you itemize
To claim any deduction for state and local taxes on your federal return, you must file Schedule A and forgo the standard deduction. The IRS instructions make clear that you use Schedule A to figure your itemized deductions, and that your federal income tax will generally be lower only if you take the larger of your itemized deductions or your standard deduction. In other words, the SALT deduction is available exclusively to taxpayers who itemize. If the total of all your itemized amounts - including state and local taxes, mortgage interest, charitable gifts, and certain other expenses - does not exceed your standard deduction, you will receive no tax benefit from your state and local taxes at all. For 2021, even when you do itemize, the overall deduction for state and local taxes is capped at $10,000, so only taxpayers whose combined itemized expenses surpass the standard deduction threshold will actually see a reduction in tax from these payments.
Use Schedule A (Form 1040) to figure your itemized deductions. In most cases, your federal income tax will be less if you take the larger of your itemized deductions or your standard deduction.
2021 Instructions for Schedule A (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
2021 Instructions for Schedule A (IRS)
- Deduction limit
The deduction for state and local taxes is generally limited to $10,000 ($5,000 if married filing separately).