SALT Deduction Calculator 2026 (OBBB)
Calculate your State and Local Tax (SALT) deduction under the 2026 One Big Beautiful Bill. The new law raises the cap from $10,000 to $40,400 with income-based phase-out. Enter your details to see your deductible amount, tax savings, and how the phase-out affects your cap.
How the 2026 SALT Deduction Works Under OBBB
The One Big Beautiful Bill (OBBB) signed into law in 2026 significantly changes the State and Local Tax (SALT) deduction landscape. Under the previous Tax Cuts and Jobs Act, SALT deductions were capped at $10,000 regardless of income or filing status. The OBBB raises this cap to $40,400 for 2026, providing substantial relief for taxpayers in high-tax states like New York, California, New Jersey, Connecticut, and Illinois. However, the new law introduces an income-based phase-out mechanism that gradually reduces the cap for higher earners, ensuring the benefit is targeted toward middle-income households.
SALT Cap Phase-Out Rules for High Earners
The phase-out begins at $505,000 of Modified Adjusted Gross Income (MAGI) for both single filers and married couples filing jointly. For every dollar of MAGI above $505,000, the $40,400 cap is reduced by $0.30. This means the cap decreases gradually as income rises. The cap floors at $10,000 — the same as the old TCJA limit — and never drops below that amount. The phase-out is complete at approximately $606,333 MAGI, at which point the taxpayer's SALT cap reverts to the old $10,000 limit. This design means middle-income homeowners in high-tax states benefit most from the increased cap, while very high earners effectively remain at the prior $10,000 cap.
Who Benefits Most from the New SALT Cap
The biggest beneficiaries of the raised SALT cap are homeowners and higher-income earners in states with significant state income taxes and property taxes. A married couple in New Jersey paying $15,000 in state income tax and $18,000 in property taxes would have been limited to a $10,000 deduction under the old law. Under the OBBB, they can deduct the full $33,000 if their MAGI is below $505,000. This translates to an additional $23,000 deduction, potentially saving $5,000 to $8,500 in federal taxes depending on their marginal rate. Taxpayers in low-tax states with minimal state income taxes and property taxes under $10,000 will see little change from this provision.
SALT Deduction Strategy Tips for 2026
To maximize your SALT deduction under the new rules, consider timing your property tax and estimated state tax payments strategically. If your MAGI is near the $505,000 phase-out threshold, deferring income or accelerating deductions could keep your cap closer to the full $40,400. Married couples should evaluate whether filing jointly or separately provides a better overall tax result, as the phase-out threshold applies per return. Keep detailed records of all state income taxes, local taxes, and property taxes paid during the tax year. Consult a tax professional to determine whether itemizing with the higher SALT cap produces more savings than taking the increased standard deduction of $32,300 for married filing jointly or $16,150 for single filers in 2026.