SALT Deduction Rises to $40,400 in 2026: How to Maximize It
Congress raised the SALT deduction cap to $40,400 for 2026. Tax experts share strategies to get the most from the expanded break.
Congress has set the state and local tax deduction cap at $40,400 for 2026, a significant jump from the $10,000 ceiling that had frustrated high-tax-state residents since the 2017 Tax Cuts and Jobs Act. The change gives millions of homeowners and high earners a renewed opportunity to reduce their federal tax bill by writing off a larger share of what they pay to state and local governments.
Tax professionals are urging eligible filers to act before year-end rather than wait until filing season. Strategic timing of property tax payments and state estimated tax installments can make a meaningful difference in whether a taxpayer fully exploits the higher ceiling — or leaves deductible dollars on the table.
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The deduction only delivers value to filers who itemize, meaning the expanded cap is most relevant to households whose combined deductions exceed the standard deduction threshold. For married couples filing jointly, that standard deduction remains a high bar, so careful calculation is essential before committing to an itemization strategy.
Residents in high-tax states such as California, New York, and New Jersey stand to benefit most, as their annual state income and property tax burdens often approached or exceeded the old $10,000 limit. With the new cap more than four times higher, a broader swath of upper-middle-income households now have incentive to revisit their year-end planning with a tax adviser.
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