What’s the Deal with SALT Deductions?

(And Why It Matters for Homeowners)

If you’ve ever itemized your taxes, you’ve probably heard of the SALT deduction—short for State and Local Tax. It lets taxpayers deduct property taxes, along with either state income or sales taxes, from their federal taxable income. Sounds reasonable, right? You shouldn’t be taxed twice on the same money.

But here’s the rub: since 2018, the SALT deduction has been capped at $10,000 ($5,000 if you’re married filing separately), thanks to the Tax Cuts and Jobs Act. That cap disproportionately impacts homeowners in higher-tax states where property and income taxes often exceed that limit.

According to a helpful consumer guide from the National Association of REALTORS® (NAR), Consumer Guide: State and Local Tax (SALT) Deductions, this cap caused a sharp drop in the number of people itemizing deductions—from about 31% down to just 11%. And the average SALT deduction dropped too, hitting homeowners right where it counts.

Beginning with the 2025 tax year, you can claim up to $40,000 in SALT deductions, quadruple the $10,000 maximum in effect from 2018 through 2024. The deduction increases slightly each year through 2029, then reverts to $10,000 unless Congress acts to preserve the increase.

NAR continues to advocate for lifting or removing the cap, arguing that it unfairly raises the cost of homeownership and hurts local economies. The current cap is set to expire after 2025—but until then, it’s something both homeowners and real estate professionals should keep in mind.

The bottom line is this: if you live in a lower-tax state or don’t pay much in state or local taxes, the $10,000 cap on SALT deductions probably isn’t a big deal. But for homeowners in high-tax areas who used to deduct well over that amount, the cap can feel like a financial squeeze. The policy remains controversial—critics argue it mainly benefits the wealthy, while supporters claim it helps fund strong local services. No matter your tax bracket or whether you rent or own, the SALT deduction continues to have a noticeable impact on household finances across the country.