Quick answer: The $10,000 cap on state and local tax (SALT) deductions from the 2017 Tax Cuts and Jobs Act was scheduled to expire after 2025; recent legislation has kept a SALT cap in place but raised it, which mainly affects taxpayers in high-tax states who itemize deductions.

What the SALT cap actually limits

The SALT deduction lets itemizing taxpayers deduct state and local income or sales taxes plus property taxes on their federal return. The Tax Cuts and Jobs Act capped this combined deduction at $10,000 per year starting in 2018, hitting homeowners in high-tax, high-property-value states hardest, since previously there was no cap.

Why this matters even if you don’t itemize

Only taxpayers who itemize deductions (rather than take the standard deduction) are affected by the SALT cap directly. But because the standard deduction was also roughly doubled by the same 2017 law, most filers now take the standard deduction regardless – so any change to the SALT cap mainly matters to higher-income itemizers in states like California, New York, and New Jersey.

Frequently Asked Questions

Does the SALT cap affect retirement account contributions?
No, the SALT cap is about deducting state and local taxes on your federal return; it does not directly limit IRA or 401(k) contribution amounts, which are set separately by the IRS.

Who benefits most from a higher SALT cap?
Itemizing taxpayers with high property taxes or state income taxes – typically higher-income homeowners in high-tax states – benefit most from a higher or removed SALT cap.

Source: IRS – Tax Reform: Basics for Individuals and Families

Written by Samuel, Certified Public Accountant. Published August 2026.