OBBB SALT Cap 2026 State Comparison Calculator
Calculate the federal tax cost of the State And Local Tax (SALT) deduction cap for 2026 across major high-tax states. Models your actual state income tax + property tax against the OBBB-era SALT cap ($10,000 single/MFJ; phase-up to $40,000 MFJ for some high earners under OBBB provisions). Free — runs in your browser.
The SALT Cap After OBBB
The Tax Cuts and Jobs Act of 2017 imposed a $10,000 cap on the itemized deduction for State and Local Taxes (SALT) — combining state income tax, state and local sales tax, and property tax. The cap was originally scheduled to expire after 2025. The One Big Beautiful Bill Act (P.L. 119-21, July 4, 2025) preserved the cap with revisions: the base $10,000 cap remains for single filers and married filing separately ($5,000 MFS). For married filing jointly, OBBB created a higher cap that phases in based on income — at certain income levels the MFJ SALT cap rises toward $40,000 before phasing back down. Exact OBBB SALT phase-in mechanics depend on final IRS regulations and may vary from this model; verify with current IRS guidance. Source: IRS SALT Deduction Overview.
Highest-Impact States
States with the highest combined income + property tax burdens lose the most to the SALT cap. California (top rate 13.3%), New York (top rate 10.9% + NYC 3.876%), New Jersey (top rate 10.75%), Connecticut (top rate 6.99% + property), Hawaii (top rate 11%), and Oregon (top rate 9.9%) regularly hit the cap on six-figure incomes. A $400,000 California household with $35,000 in state income tax + $12,000 in property tax has $47,000 of SALT — capped at $10,000 federally, losing $37,000 of deduction. At a 32% federal marginal rate, that costs $11,840 in additional federal tax annually compared to a no-cap world. Source: Tax Foundation State Income Tax Rates.
Pass-Through Entity (PTE) Tax Workarounds
Most states (36+ as of 2025) have enacted Pass-Through Entity Tax (PTE) elections that allow S-corp shareholders and partnership/LLC partners to pay their state tax at the entity level, where it remains fully deductible against federal income — effectively bypassing the individual SALT cap. The PTE election is made annually at the entity level and must be coordinated with quarterly estimated payments. For a high-earning S-corp owner in California, a PTE election can preserve 4-7% of net income that would otherwise be lost to the cap. The IRS blessed PTE workarounds in Notice 2020-75. Most PTE elections must be made by a state-specific deadline early in the tax year — missing it disqualifies the workaround for that year. Source: IRS Notice 2020-75.
Other Workarounds: Charitable Conversion and State of Domicile
Several states (NY, NJ, CT, others) created charitable funds where residents can donate property tax to a state-controlled charity in exchange for a state tax credit — converting the non-deductible SALT into a federally-deductible charitable contribution. IRS regulations under §170 limit the effectiveness of these workarounds where the state credit exceeds 15% of the contribution. The cleanest workaround for high earners with location flexibility is changing tax domicile to a no-income-tax state (Florida, Texas, Tennessee, Nevada, Washington, Wyoming, South Dakota, Alaska, New Hampshire — interest/dividend tax only). Domicile changes require 183+ days physical presence and severing prior-state ties (driver license, voter registration, primary residence). See our Texas Income Tax Calculator and Florida Income Tax Calculator. Last updated May 2026.