SALT (State and Local Tax)

SALT (State and Local Tax) refers to taxes imposed by state and local governments on individuals and businesses, including income, sales, and property taxes. These taxes fund public services such as education, transportation, and safety. SALT deductions allow taxpayers to reduce their federal taxable income by the amount paid in these state and local taxes, up to a specified limit. This system aims to lessen the overall tax burden, particularly for those in high-tax states, but recent changes have capped the deduction at $10,000. Understanding SALT helps clarify how local governance impacts personal and business finances.