State and Local Taxes (SALT)

State and Local Taxes (SALT) are the taxes imposed by state and local governments, including income, property, and sales taxes. They fund public services like schools, roads, and emergency services. SALT deductions allow taxpayers to subtract these taxes from their federal taxable income, reducing overall tax liability. However, the Tax Cuts and Jobs Act of 2017 restricted this deduction to a limit of $10,000 annually, affecting taxpayers in high-tax jurisdictions. Understanding SALT helps in assessing the true cost of living in different areas and impacts financial planning.