💡 Schedule A: State and Local Taxes (SALT)

One of the most popular Schedule A deductions involves state and local taxes (SALT) — this includes income taxes (or sales tax, at your election), real estate taxes, and personal property taxes paid in the U.S.

💸 Current SALT Limits

For 2025, the SALT deduction limit is $40,000 for Married Filing Jointly (MFJ) and Heads of Household (HOH), and $20,000 for Married Filing Separately (MFS) and Single filers. This cap applies to all state and local property and income taxes paid within the U.S.

Foreign income taxes are not subject to the SALT cap. You generally have two options: claim them as a credit using Form 1116 under the Foreign Tax Credit, or deduct them separately in Schedule A. In most cases, Form 1116 offers the more favorable tax outcome.

📍 Example

If you pay property taxes in multiple states, the total amount of those taxes cannot exceed $20,000/$40,000 when claimed as an itemized deduction in Schedule A.

📝 Temporary Changes Under OBBBA

The One Big Beautiful Bill Act raised the SALT deduction cap from $10,000 to $20,000/$40,000 for tax years 2025 through 2029.

This increased limit begins to phase out when Modified Adjusted Gross Income (MAGI) exceeds $250,000 ($500,000 for joint filers), but never drops below the original $10,000 floor.

➡️ Starting in 2030, the cap will permanently revert to $10,000.

🔍 Conclusion

The SALT deduction remains a powerful tool for reducing taxable income — but it comes with hard limits. With the temporary OBBBA enhancements now in effect, strategic planning around major real estate purchases or interstate moves is more important than ever.

➡️ In our next post, we’ll break down how buying a home with a mortgage affects your U.S. taxes: which interest deductions are available and what limits apply.

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