2025 SALT Deduction Limit
For 2025, the SALT Deduction Limit figures are $40,000 (Deduction limit), $20,000 (Deduction limit, married filing separately), $500,000 (Phase-down threshold (MAGI)) and 4 more figures below.
| Item | Amount | Married filing separately |
|---|---|---|
| Deduction limit | $40,000 | $20,000 |
| Phase-down threshold (MAGI) | $500,000 | $250,000 |
| Phase-down floor | $10,000 | $5,000 |
Effective 2025-01-01Source: 2025 Instructions for Schedule A (Form 1040) (IRS)Verified 2026-09-03
Compared with 2024
| Item | 2024 | 2025 | Change |
|---|---|---|---|
| Deduction limit | $10,000 | $40,000 | +$30,000 (+300.0%) |
| Deduction limit, married filing separately | $5,000 | $20,000 | +$15,000 (+300.0%) |
| Phase-down threshold (MAGI) | -1 | $500,000 | - |
| Phase-down threshold (MAGI), married filing separately | -1 | $250,000 | - |
| Phase-down floor | -2 | $10,000 | - |
| Phase-down floor, married filing separately | -2 | $5,000 | - |
| Phase-down rate | -3 | 30% | - |
- the MAGI phase-down of the SALT deduction limit is an addition to section 164(b)(6) made by the One, Big, Beautiful Bill Act, effective for taxable years beginning after 2024. Before then the limit was a flat dollar cap with no income-based reduction
- the MAGI phase-down of the SALT deduction limit is an addition to section 164(b)(6) made by the One, Big, Beautiful Bill Act, effective for taxable years beginning after 2024. Before then the limit was a flat dollar cap with no floor to state, because it had no phase-down
- the MAGI phase-down of the SALT deduction limit is an addition to section 164(b)(6) made by the One, Big, Beautiful Bill Act, effective for taxable years beginning after 2024. Before then there was no phase-down rate to state
Who it applies to
Taxpayers who itemize deductions on Schedule A (Form 1040) and pay state and local income, sales, or property taxes
What changed this year, and why
For 2025, the overall limit on the deduction for state and local income, sales, and property taxes (the SALT deduction) is $40,000, up from $10,000 in 2024.
Common questions
- Does the limit apply to all state and local taxes?
- The limit applies to the combined total of state and local income taxes, sales taxes, and property taxes reported on Schedule A (Form 1040), lines 5a, 5b, and 5c.
- Is the limit reduced for higher-income taxpayers?
- Yes. The source document states that the limit is reduced for higher-income taxpayers, but the limit will not be reduced below $10,000.
Every amount on this page is a published figure rather than yours. The SALT deduction after the income phase-down takes the number you enter and works it out against them, showing which published figure it used.
The limit shrinks above a stated income
For 2025 the overall SALT deduction limit is $40,000, and that limit is not the whole rule: it is reduced once modified adjusted gross income passes a threshold. The Schedule A instructions state the threshold as $500,000, or $250,000 for a married person filing separately. A taxpayer whose MAGI is at or below the threshold claims the full $40,000; above it, the limit shrinks as income rises. The instructions also state a floor below which the reduction stops, and that floor is a separate amount this page does not publish, so it is not stated here.
The overall limit is reduced if your modified adjusted gross income is more than $500,000 ($250,000 if married filing separately)
2025 Instructions for Schedule A (IRS)
Income taxes or sales taxes, one or the other
When itemizing deductions on Schedule A, taxpayers must choose between deducting state and local general sales taxes or state and local income taxes. You cannot deduct both categories in the same tax year. This election allows taxpayers to select whichever option provides the larger deduction based on their circumstances. For example, if you live in a state with no income tax but made significant purchases subject to sales tax, electing the sales tax deduction may be more beneficial. Conversely, if you had substantial state income tax withholdings, the income tax deduction may be the better choice. The election applies to the total amount claimed on line 5a of Schedule A, and you must make this choice when filing your return. Once made, the election is binding for that tax year.
You can elect to deduct state and local general sales taxes instead of state and local income taxes. You can't deduct both.
2025 Instructions for Schedule A (IRS)
What is not a deductible tax
Not all taxes you pay are deductible as itemized deductions. Federal income taxes and most federal excise taxes cannot be deducted. Social security, Medicare, federal unemployment (FUTA), and railroad retirement (RRTA) taxes are also non-deductible. Customs duties, federal estate and gift taxes, and certain state and local taxes fall into this category as well. Specifically, state and local taxes on gasoline, car inspection fees, assessments for sidewalks or other property improvements, taxes you paid on behalf of someone else, and license fees such as marriage, driver's, or pet licenses are not deductible. Foreign personal or real property taxes also cannot be deducted. Only specific categories of state and local income, sales, and property taxes qualify for the SALT deduction, subject to the overall limit.
Certain state and local taxes, including 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).
2025 Instructions for Schedule A (IRS)
Payroll contributions that do count
Mandatory payroll contributions to certain state benefit funds are deductible as state and local taxes. Specifically, mandatory contributions you made to the California, New Jersey, or New York Nonoccupational Disability Benefit Fund, the Rhode Island Temporary Disability Benefit Fund, or the Washington State Supplemental Workmen's Compensation Fund qualify as deductible state taxes. Additionally, mandatory contributions to state unemployment funds in Alaska, California, New Jersey, or Pennsylvania are deductible. Mandatory contributions to state family leave programs, such as the New Jersey Family Leave Insurance program and the California Paid Family Leave program, also count. These mandatory payroll deductions are treated as state taxes paid and can be included in your SALT deduction, subject to the overall $40,000 limit. Voluntary contributions to similar programs do not qualify.
Mandatory contributions you made to the California, New Jersey, or New York Nonoccupational Disability Benefit Fund; Rhode Island Temporary Disability Benefit Fund; or Washington State Supplemental Workmen's Compensation Fund.
2025 Instructions for Schedule A (IRS)
You only get this if you itemize
The SALT deduction is only available if you itemize your deductions on Schedule A. You cannot claim state and local tax deductions if you take the standard deduction. In most cases, your federal income tax will be lower if you take the larger of your itemized deductions or your standard deduction. This means you must compare your total itemized deductions, including state and local taxes, mortgage interest, charitable contributions, and other qualifying expenses, against the standard deduction amount for your filing status. Only if your itemized deductions exceed the standard deduction should you itemize. The SALT deduction, even when it reaches the $40,000 limit, is just one component of your total itemized deductions. If your combined itemized deductions do not exceed the standard deduction, you receive no tax benefit from your state and local tax payments.
In most cases, your federal income tax will be less if you take the larger of your itemized deductions or your standard deduction.
2025 Instructions for Schedule A (IRS)
Prepaying next year's property tax before it is assessed doesn't count this year
Under federal tax rules for the 2025 tax year, prepaying your property tax bill before it has been officially assessed does not allow you to claim that deduction on your 2025 return. The IRS requires that for a property tax payment to be deductible in 2025, it must both be paid during 2025 and assessed by the local taxing authority prior to 2026. Whether and when a property tax is assessed is determined by state or local law, which generally means the moment the taxpayer becomes legally liable for the tax. Simply paying early is not enough; the assessment itself must occur before the new year begins. This prevents taxpayers from accelerating deductions for taxes that have not yet been formally imposed by the local government for that tax year. If your taxing authority does not furnish a copy of your real estate tax bill, you should request one to confirm when the tax was assessed.
If your taxing authority (or lender) doesn't furnish you a copy of your real estate tax bill, ask for it. Prepayment of next year's property taxes. Only taxes paid in 2025 and assessed prior to 2026 can be deducted for 2025. State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.
2025 Instructions for Schedule A (IRS)
How the totals move from lines 5a-5c to the capped amount on line 5e
The Schedule A (Form 1040) worksheet for the 2025 state and local tax (SALT) deduction walks taxpayers through a series of lines that combine income, sales, and property taxes. After entering the relevant amounts on lines 5a, 5b, and 5c and totaling them on line 5d, the taxpayer must apply the statutory cap. The instructions direct the taxpayer to enter the smaller of the amount on line 5d or $40,000 on line 5e. This cap applies per return, meaning married taxpayers filing separately are limited to $20,000. If the taxpayer's modified adjusted gross income exceeds certain thresholds, a separate worksheet must be completed to further reduce the deductible amount before it is entered on line 5e.
enter the smaller of line 5d or $40,000 ($20,000 if married filing separately)
2025 Instructions for Schedule A (IRS)
A refund of tax you already deducted can come back as income
If a taxpayer receives a refund of state or local general sales taxes in 2025 for purchases made in a prior year, and those sales taxes were previously deducted and reduced the taxpayer's federal tax liability in that earlier year, the refund may be taxable. The IRS instructions state that the taxpayer may have to include the refund in income on Schedule 1 (Form 1040), line 8z. The taxpayer should not reduce their current-year sales tax deduction by the amount of a refund for prior-year purchases; instead, the tax benefit rule determines whether the recovered amount must be reported as income. Additional details on how to calculate and report the taxable portion of the refund can be found in Recoveries in Publication 525.
if you deducted your actual state and local general sales taxes in the earlier year and the deduction reduced your tax, you may have to include the refund in income on Schedule 1 (Form 1040), line 8z
2025 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.
2025 Instructions for Schedule A (Form 1040) (IRS)
- Deduction limit
The overall limit on the deduction for state and local income, sales, and property taxes has increased to $40,000 ($20,000 if married filing separately)
- Deduction limit, married filing separately
The overall limit on the deduction for state and local income, sales, and property taxes has increased to $40,000 ($20,000 if married filing separately)
- Phase-down threshold (MAGI)
modified adjusted gross income is more than $500,000 ($250,000 if married filing separately) but will not be reduced below $10,000 ($5,000 if married filing separately).
- Phase-down threshold (MAGI), married filing separately
modified adjusted gross income is more than $500,000 ($250,000 if married filing separately) but will not be reduced below $10,000 ($5,000 if married filing separately).
- Phase-down floor
modified adjusted gross income is more than $500,000 ($250,000 if married filing separately) but will not be reduced below $10,000 ($5,000 if married filing separately).
- Phase-down floor, married filing separately
modified adjusted gross income is more than $500,000 ($250,000 if married filing separately) but will not be reduced below $10,000 ($5,000 if married filing separately).
- Phase-down rate
Multiply line 6 by 30% (0.30)