Updated September 29, 2026. Quick answer: The State and Local Tax itemized deduction cap is $40,000 for 2025 and $40,400 for 2026 under 26 U.S.C. §164(b)(6)-(7). Unlike almost every other figure on this site, the 2027 cap is not a forecast: the statute itself sets each year’s cap at 101 percent of the prior year’s dollar amount, so 2027 is $40,400 times 1.01, exactly $40,804. The cap phases down by 30 percent of modified adjusted gross income over a $505,000 threshold for 2026 (also rising 1 percent a year, to $510,050 for 2027), never below a $10,000 floor, and the entire higher-cap regime reverts to a flat $10,000 cap for tax years beginning after 2029.
Read box by box from the IRS instructions: Form 1098 boxes explained, Form 1098 box 1 and Form 1098 box 5.
The employee copy of Form W-2, read box by box: W-2 boxes 15 to 17 and W-2 boxes 18 to 20.
The recipient copy of Form 1099-G or 1099-K, read box by box: 1099-G boxes 2 and 3 and 1099-G box 10.
More IRS forms and schedules, read line by line: Schedule A instructions.
The IRS form or worksheet behind this, read line by line: Form 1098 boxes.
The 2026 amount, set by the same statute: the 2026 SALT cap.
The SALT cap and its phase-down threshold, 2025-2027
| Year | Cap | Phase-down threshold (MAGI) |
|---|---|---|
| 2025 | $40,000 | $500,000 |
| 2026 | $40,400 | $505,000 |
| 2027 (101% escalator, fixed by statute) | $40,804 | $510,050 |
The escalator is arithmetic, not an announcement
26 U.S.C. §164(b)(7)(A), added by the One Big Beautiful Bill Act of 2025 (Public Law 119-21, §70120), sets the cap at $40,000 for 2025, $40,400 for 2026, and for every year after 2026 and before 2030 at “101 percent of the dollar amount in effect under this subparagraph for taxable years beginning in the preceding calendar year.” The phase-down threshold in §164(b)(7)(B)(ii) uses the identical 101-percent formula, moving from $500,000 (2025) to $505,000 (2026) to $510,050 (2027). Above the threshold, the cap is reduced by 30 percent of the excess MAGI (half the threshold for a married-filing-separately return), but §164(b)(7)(B)(iii) guarantees the reduction never takes the cap below $10,000. The whole higher-cap structure, including the escalator and the phase-down, applies only through tax years beginning before 2030; for tax years beginning after 2029, §164(b)(7)(A)(iv) reverts the cap to a flat $10,000 ($5,000 for a married individual filing a separate return, because §164(b)(6) halves the cap for that status) with no phase-down at all, matching the original 2018 Tax Cuts and Jobs Act cap.
Why 2027 does not need a forecaster
Most of the figures in this series depend on the Bureau of Labor Statistics’ chained CPI data each August and September, which is why a named forecaster (Milliman, Bloomberg Tax, Thomson Reuters Checkpoint) has to estimate them before the IRS publishes the official number in the following autumn. The SALT cap escalator sidesteps that process entirely: Congress wrote a flat 1 percent multiplier directly into the statute, so the 2027 dollar amount is fully determined the moment the 2026 amount is known, with no inflation data, no rounding convention, and no IRS Revenue Procedure required. No forecaster publication was found projecting this figure, and none is needed.
The rates are already settled. Only the thresholds are still moving.
That is enough to plan against. A Roth conversion, a deferred bonus or a gain taken in 2027 can be sized today against the 10%, 12%, 22%, 24%, 32%, 35% and 37% rates the statute already fixes, without waiting for the Revenue Procedure. If you want someone to price that decision against your own income rather than a projection, this is the point to ask.
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Sources
The cap and phase-down threshold on this page were checked against 26 U.S.C. §164(b)(6) and (7), and the 2027 amounts were recomputed from the statute's 101 percent formula (40,400 x 1.01 = 40,804; 505,000 x 1.01 = 510,050), on September 29, 2026.
- 26 U.S.C. §164(b)(6)-(7), via Cornell Law School's Legal Information Institute: the exact 2025 ($40,000/$500,000) and 2026 ($40,400/$505,000) dollar figures, the 101 percent annual escalator for 2027 through 2029, the 30 percent phase-down rate, the $10,000 floor, and the post-2029 reversion to a flat $10,000 cap, read directly from the codified statutory text.
- 26 U.S.C. §164 (uscode.house.gov): the statute that defines these figures.
Statute: 26 U.S.C. §164(b)(6)-(7), as amended by the One Big Beautiful Bill Act of 2025 (Public Law 119-21), §70120.
Related
General information, not tax or legal advice. This page will be updated with the official 2027 figure the day it is announced.