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State and local tax deduction
The state and local tax deduction (SALT deduction) is a United States federal itemized deduction that allows taxpayers to deduct certain taxes paid to state and local governments from their adjusted gross income.
The SALT deduction is intended to avoid double taxation by allowing taxpayers to deduct state and local taxes from their income that is assessed for federal income tax. Eligible taxes include state and local income taxes and property taxes.
The deduction disproportionately benefits wealthy and upper-middle class taxpayers living in areas with comparatively high state and property taxes.
The SALT deduction already existed, but the Tax Cuts and Jobs Act of 2017 signed into law by President Donald Trump put a $10,000 cap on the SALT deduction for the years 2018–2025.
The Tax Policy Center estimated in 2016 that fully eliminating the SALT deduction would increase federal revenue by nearly $1.3 trillion over 10 years.
For US federal income tax purposes, state and local taxes are defined in section 164(a) of the Internal Revenue Code as taxes paid to states and localities in the forms of: (i) real property taxes; (ii) personal property taxes; (iii) income, war profits, and excess profits taxes; and (iv) general sales taxes. The Tax Cuts and Jobs Act of 2017 capped the use of this itemized deduction at $10,000 ($5,000 for married persons who file separately).
The SALT deduction allows US taxpayers to deduct certain state and local taxes paid from their federal income tax returns. Eligible taxes include state and local income taxes, property taxes, and either state and local sales taxes or state and local general sales taxes.
To claim the deduction, taxpayers must itemize their deductions on Schedule A of Form 1040. There is a $10,000 limit on the SALT deduction, or $5,000 for a married person filing a separate return.
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State and local tax deduction
The state and local tax deduction (SALT deduction) is a United States federal itemized deduction that allows taxpayers to deduct certain taxes paid to state and local governments from their adjusted gross income.
The SALT deduction is intended to avoid double taxation by allowing taxpayers to deduct state and local taxes from their income that is assessed for federal income tax. Eligible taxes include state and local income taxes and property taxes.
The deduction disproportionately benefits wealthy and upper-middle class taxpayers living in areas with comparatively high state and property taxes.
The SALT deduction already existed, but the Tax Cuts and Jobs Act of 2017 signed into law by President Donald Trump put a $10,000 cap on the SALT deduction for the years 2018–2025.
The Tax Policy Center estimated in 2016 that fully eliminating the SALT deduction would increase federal revenue by nearly $1.3 trillion over 10 years.
For US federal income tax purposes, state and local taxes are defined in section 164(a) of the Internal Revenue Code as taxes paid to states and localities in the forms of: (i) real property taxes; (ii) personal property taxes; (iii) income, war profits, and excess profits taxes; and (iv) general sales taxes. The Tax Cuts and Jobs Act of 2017 capped the use of this itemized deduction at $10,000 ($5,000 for married persons who file separately).
The SALT deduction allows US taxpayers to deduct certain state and local taxes paid from their federal income tax returns. Eligible taxes include state and local income taxes, property taxes, and either state and local sales taxes or state and local general sales taxes.
To claim the deduction, taxpayers must itemize their deductions on Schedule A of Form 1040. There is a $10,000 limit on the SALT deduction, or $5,000 for a married person filing a separate return.
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