Is the $10,000 SALT Deduction Limit Per Person or Family?

Understanding federal income tax deductions, particularly limits on benefits like the state and local tax (SALT) deduction, can be challenging. Taxpayers often seek clarity on whether deduction limits apply to each individual or to an entire household. This distinction is particularly relevant for the SALT deduction, which has seen significant changes, leading to widespread confusion.

The State and Local Tax (SALT) Deduction Cap

The state and local tax (SALT) deduction allows taxpayers who itemize their deductions to reduce their federal taxable income by the amount of certain state and local taxes they have paid. This deduction aims to prevent a form of double taxation, where income is taxed at both the state/local level and again at the federal level. Historically, there was no federal limit on the amount of state and local taxes that could be deducted.

The Tax Cuts and Jobs Act (TCJA) of 2017 imposed a cap on the SALT deduction, limiting it to $10,000 per tax return for tax years 2018 through 2024. This $10,000 limit applied regardless of the number of individuals included on that return.

For the 2025 tax year, the “One Big Beautiful Bill Act,” signed into law on July 4, 2025, temporarily increases the maximum SALT deduction to $40,000. This higher cap, like its predecessor, applies per tax return, not per individual.

For a married couple filing jointly, their combined deduction for eligible state and local taxes is capped at $40,000 for the 2025 tax year, not $40,000 per spouse. The increased cap is subject to a phase-out for higher modified adjusted gross incomes (MAGI) and is scheduled to revert to the $10,000 cap in 2030, with annual 1% increases through 2029.

Applicability Based on Filing Status

The SALT deduction limit varies depending on a taxpayer’s filing status, as the cap is tied to the tax return. For single filers, the $40,000 limit applies to their individual tax return for 2025. They can deduct up to $40,000 of eligible state and local taxes paid.

For married individuals filing jointly, the $40,000 limit applies to their combined tax return. Their total deduction on their joint federal return cannot exceed $40,000 for 2025, regardless of how much each spouse paid individually. This differs significantly from a per-person limit, where each spouse might claim a separate deduction.

Married individuals filing separately face a specific application of the limit. For the 2025 tax year, each spouse filing separately is subject to a $20,000 limit on their individual tax return. This effectively allows a married couple to potentially deduct a total of $40,000 if both itemize and have sufficient state and local taxes.

Taxpayers filing as Head of Household or Qualifying Widow(er) are also subject to the $40,000 cap on their single tax return for 2025. These filing statuses represent a single tax filing unit, and the deduction limit applies to the total eligible taxes reported on that return. The consistent application across these various statuses underscores that the cap is a function of the tax return.

Understanding What Taxes Count Towards the Limit

The $40,000 SALT deduction cap for 2025 includes specific types of state and local taxes paid by taxpayers. These eligible taxes include state and local income taxes, which are paid on earnings to state and local governments, covering withheld income tax or estimated tax payments.

Real estate taxes, also known as property taxes, are another component that counts towards the cap. These are assessed on owned real property, such as a primary residence or land. Personal property taxes, assessed on certain personal assets like vehicles or boats based on their value, also qualify.

Taxpayers can deduct either their state and local income taxes or their state and local general sales taxes, but not both. This choice allows individuals in states without an income tax, or those who paid a significant amount in sales tax on large purchases, to still benefit from the deduction. Regardless of this choice, real estate and personal property taxes are deductible and included in the combined cap.