Updated October 1, 2026. Quick answer: For tax year 2026 the cap on the state and local tax (SALT) deduction is $40,400. The cap shrinks by 30% of the amount your modified adjusted gross income is over $505,000, and it never falls below $10,000. Public Law 119-21 sets these figures in the statute itself, so no IRS inflation table changes them.
IRS worksheets read line by line: W-4 Deductions Worksheet.
Read box by box from the IRS instructions: Form 1098 box 2, Form 1098 box 3 and box 11 and Form 1098 box 10.
The employee copy of Form W-2, read box by box: W-2 box 11, 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 box 1, 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 SALT cap and its phase-down
| Item | 2026 |
|---|---|
| Cap on state and local taxes (SALT) for 2026 | $40,400 |
| Cap if married filing separately (computed) | $20,200 |
| Modified adjusted gross income where the phase-down starts | $505,000 |
| Same threshold if married filing separately (computed) | $252,500 |
| Reduction | 30% of the income over the threshold |
| Lowest the cap can fall | $10,000 |
| Income where the cap reaches the floor (computed) | $606,333 |
Section 70120 of Public Law 119-21 says the applicable limitation amount is “in the case of any taxable year beginning in calendar year 2026, $40,400”. It adds that the amount is reduced “by 30 percent of the excess (if any) of the taxpayer’s modified adjusted gross income over the threshold amount” and that the reduction cannot take the amount below $10,000. The 2026 threshold is “in the case of any taxable year beginning in calendar year 2026, $505,000”. The married filing separately cap and threshold are computed here from the statute’s half rule, and the floor income is computed from the 30% reduction.
How it compares with 2025 returns
The IRS instructions for the 2025 Schedule A say “The overall limit on the deduction for state and local income, sales, and property taxes has increased to $40,000 ($20,000 if married filing separately).” and that “The overall limit is reduced if your modified adjusted gross income is more than $500,000 ($250,000 if married filing separately) but will not be reduced below $10,000 ($5,000 if married filing separately).” So 2026 raises the cap by $400 and the threshold by $5,000 (computed), with the same 30% reduction and $10,000 floor. The 2026 figures come from the statute above, which the 2025 instructions predate.
A worked example
As a computed example, take a joint filer with $550,000 of modified adjusted gross income, an illustration and not a source figure. That is $45,000 over the threshold, so the cap falls by 30% of that excess, $13,500 (computed). The cap becomes $26,900 (computed). Nothing changes for a filer below $505,000.
Modified adjusted gross income, defined
The statute defines the term: “adjusted gross income increased by any amount excluded from gross income” under sections 911, 931 or 933. Anything that raises adjusted gross income inside the phase-down range, such as a Roth conversion or a realized gain, lowers the cap by 30 cents for each added dollar. That only costs you if your state and local taxes paid are above the reduced cap.
Where the cap goes next
For years after 2026 the statute says the amount is “101 percent of the dollar amount in effect under this subparagraph for taxable years beginning in the preceding calendar year”, which gives $40,804 for 2027 (computed). For taxable years after 2029 the statute sets the amount back at $10,000. The 2027 detail is on the 2027 SALT cap page.
Common mistakes
- Using the old $10,000 cap for 2026. The statute raised it to $40,400 for this year.
- Applying the phase-down from the first dollar of income. It starts only above the threshold.
- Forgetting that the married filing separately cap and threshold are half the joint amounts.
- Treating income above the floor point as costing more deduction. The cap stops falling at $10,000.
Related: the 2027 SALT cap page, the 2026 retirement numbers hub, the 2027 numbers hub, and the 2026 tax brackets.
Find the right next step for your situation
About how much do you have invested? Pick the range that fits; your next step appears immediately below.
Compare vetted advisors for tax planning
If your portfolio is $250,000 or more, this connects you (free, with no obligation to hire anyone) with 2 to 3 vetted advisors.
Before you start, what actually happens. The matching service is run by WiserAdvisor, an independent advisor-matching company. It opens on their site, asks for your ZIP code and a few questions, and matches you with 2 to 3 vetted advisors. It is free to you.
WiserAdvisor states the service is built for portfolios of $250,000 and above. By submitting, you consent to emails, phone calls and text messages from WiserAdvisor and up to three advisors, so expect to be contacted. Clear Money Guide may earn a referral payment for a qualifying completed form, whether or not you ever hire anyone.
Opens on WiserAdvisor’s site in a new tab.
See how an advisor plans your taxes
Price the destination before you decide. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide may earn a referral payment for a qualifying submitted form, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here; you stay on this page.
What happens when you press the button
It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Prefer flat-fee or hourly pricing instead? Compare ranges here.
Answer againSources
- Public Law 119-21 (July 4, 2025), section 70120, state and local tax limitation: https://www.govinfo.gov/content/pkg/PLAW-119publ21/pdf/PLAW-119publ21.pdf
- IRS, Instructions for Schedule A (Form 1040), tax year 2025: https://www.irs.gov/instructions/i1040sca
Sources: the primary documents linked above, read on October 1, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.