SALT Deduction Limit for Married Filing Jointly

The federal SALT deduction allows taxpayers who itemize to deduct certain state and local taxes, reducing their federal taxable income. The Tax Cuts and Jobs Act of 2017 (TCJA) placed a limitation on this deduction, which particularly affects married couples who file a joint tax return.

The SALT Deduction Limit for Joint Filers

Federal law imposes a cap on the state and local tax deduction, limiting the total amount to $10,000 per household, per year. This limitation applies to the combined total of property, income, and sales taxes. For married couples filing jointly, this $10,000 figure is a firm ceiling for their combined payments. The rule is scheduled to expire at the end of 2025 unless Congress acts to modify it.

This uniform limit creates a “marriage penalty.” Two single individuals could each claim a $10,000 SALT deduction, for a total of $20,000 between them. Once married and filing a joint return, their combined potential deduction is reduced to the single $10,000 household limit. This can increase the tax burden for some married couples compared to their unmarried counterparts.

For those who are married but choose to file separate tax returns, the deduction limit is halved. Each spouse is permitted to deduct a maximum of $5,000 in state and local taxes on their individual return. This structure prevents married couples from circumventing the joint-filer limit by filing separately, as their combined total deduction would still be capped at $10,000.

Identifying Includable State and Local Taxes

To calculate the SALT deduction, taxpayers must identify which taxes are eligible. The primary components are property taxes and a choice between either income or sales taxes. Taxpayers cannot deduct both state and local income and sales taxes in the same year; they must select the one that provides the greater tax benefit.

For most people in a state that imposes an income tax, that amount is higher than their general sales tax payments, making it the more advantageous option. The deductible amount includes state and local income taxes withheld from paychecks and any estimated tax payments made to state or local governments. Payments made during the tax year for a prior year’s state or local income tax liability can also be included.

Alternatively, taxpayers can deduct state and local general sales taxes, which is most beneficial for residents of states without a state income tax. To determine the deductible amount, taxpayers can use their actual receipts to total the sales tax paid or use the optional sales tax tables provided by the IRS. The IRS also offers an online Sales Tax Deduction Calculator to simplify this estimation.

State and local real estate taxes paid on personal property are also includable. This covers taxes paid on a main home and any other vacation homes or land. Personal property taxes, such as annual vehicle registration fees, can be included, but only the portion of the fee that is based on the value of the vehicle is deductible.

Calculating and Claiming the Deduction

Claiming the SALT deduction is only possible if a taxpayer chooses to itemize deductions rather than taking the standard deduction. For the 2025 tax year, the standard deduction for a married couple filing jointly is $30,000. A couple must determine if their total itemized deductions—including mortgage interest, charitable contributions, and the SALT amount—exceed this threshold, as taking the standard deduction would otherwise result in a lower tax liability.

Once a couple confirms that itemizing is the better financial path, the deduction is claimed on Schedule A (Form 1040), Itemized Deductions. The form has specific lines for different types of state and local taxes. Taxpayers report either their state and local income taxes or their general sales taxes. State and local real estate taxes and any deductible personal property taxes are also entered on the form before the final deduction limit is applied.

State-Level Pass-Through Entity Tax Workarounds

In response to the federal cap, many states created a workaround for certain taxpayers involving a Pass-Through Entity Tax (PTET). These laws allow partnerships and S corporations to elect to pay state income tax at the entity level. This shifts the tax burden from the individual owners to the business itself.

The pass-through business pays the state income tax directly and claims the payment as a business expense on its federal tax return. Because business expenses are not subject to the $10,000 SALT deduction limitation, this allows the full amount of the state tax to be deducted at the entity level. The individual owners then receive a credit on their personal state income tax return for the tax paid by the entity on their behalf. This credit prevents them from being taxed twice on the same income and allows them to bypass the SALT cap.