SALT Cap 2027 Calculator — OBBB $40K Limit Tracker

Calculate your 2027 State and Local Tax (SALT) itemized deduction under the OBBB (P.L. 119-21) — cap raised from $10,000 to $40,000 for 2025–2029, then phased back down to $10,000 over $500,000 modified AGI. Compare what you can deduct vs the prior $10K cap. Free, private, no sign-up.

Your SALT deduction under OBBB 2027
$0
$40K cap (with phasedown above $500K AGI)
Old $10K cap (pre-OBBB)
—
TCJA original limit
Total SALT paid
—
Before cap
Federal tax saved vs $10K
—
At your marginal rate
Item Amount (USD)
OBBB 2027 SALT rules: The 2017 TCJA $10,000 SALT cap was raised to $40,000 for tax years 2025–2029 under the One Big Beautiful Bill (P.L. 119-21). The $40K cap phases down by 30% of MAGI over $500,000, reaching $10,000 at $600,000 MAGI. MFS filers get half ($20K, phasedown starting at $250K). After 2029, the cap reverts to $10,000 unless extended.
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What is the SALT cap and what changed in 2025?

The State and Local Tax (SALT) deduction lets itemizing taxpayers deduct what they paid in state income (or sales) tax plus local property tax from federal taxable income. The 2017 Tax Cuts and Jobs Act capped this deduction at $10,000 per return — a major hit for taxpayers in high-tax states like California, New York, New Jersey and Illinois. The One Big Beautiful Bill (OBBB, P.L. 119-21), signed July 4 2025, raised the cap to $40,000 for tax years 2025 through 2029.

The $40,000 cap phases down for taxpayers with modified AGI above $500,000: the cap is reduced by 30 cents per dollar of MAGI over $500K, hitting the old $10K floor at $600,000 MAGI. Married-Filing-Separately filers receive a $20,000 cap with a $250K phasedown threshold. Without further extension, the cap reverts to $10,000 starting in tax year 2030.

How to calculate your 2027 SALT deduction

SALT has three components: (1) state and local income tax OR general sales tax — you can choose whichever is larger — (2) state and local real estate (property) tax, and (3) state and local personal property tax (e.g. car registration based on value). Add the three together to get total SALT paid, then apply the OBBB cap based on your MAGI bracket.

Example: a married-jointly couple in New Jersey with $32,000 of state income tax, $14,000 of property tax, and MAGI of $380,000 has $46,000 total SALT paid. Their OBBB cap is the full $40,000 (no phasedown applies under $500K MAGI), so they deduct $40,000 — versus $10,000 under the old rules, saving them $7,200 in federal tax at the 24% marginal bracket.

Who benefits most from the OBBB SALT increase

Households in the $200K–$500K MAGI range in high-tax states benefit most: they pay enough SALT to exceed $10,000 but aren't subject to the phasedown. Lower-income filers usually take the standard deduction ($16,300 single / $32,600 MFJ for 2027) and never itemize SALT. Households above $600K MAGI receive no benefit — their cap returns to the original $10,000.

The Pass-Through Entity Tax (PTET) workaround used by partners and S-corp owners to bypass the $10K cap remains valid in 36 states. With the higher individual cap, many small-business owners can now skip the PTET election entirely. The AMT could still claw back some SALT benefit at high incomes — run AMT and regular tax in parallel to confirm.

Source: irs.gov — Topic 503 (state and local tax) and OBBB §70120. Updated May 2026 reflecting OBBB (P.L. 119-21).

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