State and Local Tax Deduction (SALT)

The State and Local Tax (SALT) deduction allows taxpayers to deduct certain state and local taxes—such as income, sales, and property taxes—paid during the year when filing their federal tax return. This deduction helps reduce overall taxable income, potentially lowering the amount of federal tax owed. However, there is a cap on this deduction—currently up to $10,000 ($5,000 if married filing separately). The SALT deduction mainly benefits taxpayers in states with higher taxes and can provide significant tax relief, though recent changes have limited its total deductibility at the federal level.