What the SALT cap is
If you itemize, federal law lets you deduct the state and local taxes you paid during the year: property tax on your home, plus either state and local income tax or sales tax. The 2017 tax law capped that deduction at $10,000 a year from 2018. The 2025 federal tax law, the One Big Beautiful Bill Act, raised the cap to $40,000 for 2025 and $40,400 for 2026, with 1% increases through 2029 (about $40,804 for 2027, $41,212 for 2028, $41,624 for 2029). In 2030 it returns to $10,000.
The cap is per return, not per person, so a married couple filing jointly gets one $40,400 limit for 2026. Filing separately, each spouse gets half.
Why it matters on Long Island
The median Long Island home’s property tax bill is $14,436 a year in Nassau and $12,221 in Suffolk before exemptions, by our estimate of every home’s bill. About 80% of Long Island homes (90% in Nassau) have a bill of $10,000 or more before exemptions, so property tax alone uses up a $10,000 limit before a dollar of state income tax counts; about 14% pay $20,000 or more.
New York State income tax counts toward the same limit. For many Long Island households the two together run well past $10,000, which is why the $10,000 cap cost them a deduction every year from 2018 to 2024, and why the higher limit matters to so many homeowners here.
The phase-down for high incomes
The limit shrinks by 30 cents for every dollar of modified adjusted gross income above a threshold: $500,000 for 2025 and $505,000 for 2026, rising 1% a year after that (about $510,050 for 2027, $515,151 for 2028, $520,302 for 2029). Married filing separately, the threshold is half. The limit can’t fall below $10,000 ($5,000 married filing separately). For 2026 it reaches that floor at about $606,333 of income.
Between those two points, if your state and local taxes are above the limit, each extra dollar of income also takes away 30 cents of deduction, so your effective federal rate on that income is higher than your bracket. Retirement contributions and other moves that lower AGI are worth more in that range. Ask your tax preparer before acting on it.
Four Long Island households in 2026
Married couples filing jointly. “Taxes paid” is property tax plus New York State income tax.
| Income (modified AGI) | Taxes paid | SALT limit | Can deduct | Under a $10,000 limit |
|---|---|---|---|---|
| $250,000 | $26,000 | $40,400 | $26,000 | $10,000 |
| $400,000 | $52,000 | $40,400 | $40,400 | $10,000 |
| $560,000 | $60,000 | $23,900 | $23,900 | $10,000 |
| $700,000 | $75,000 | $10,000 | $10,000 | $10,000 |
What counts as property tax
Count the school, town, county, village and special district taxes that are charged by the value of your home, and only what was actually paid during the tax year. If your mortgage servicer pays from escrow, use what it paid the receiver, not what it collected from you; your Form 1098 may show it.
Flat charges for a service, such as a per-house garbage fee, don’t count. Neither does tax on a rental or business property, which is deducted against that income instead. You can’t deduct next year’s tax early unless it has already been assessed: the IRS allows only taxes paid in the year and assessed before the next year begins.
Frequently asked questions
What is the SALT cap for 2026?
$40,400 for single and joint filers ($20,200 married filing separately), reduced by 30% of modified AGI above $505,000 but not below $10,000 ($5,000 married filing separately). For 2025 it is $40,000, with the reduction starting at $500,000.
When does the SALT cap go back to $10,000?
For tax years beginning in 2030, unless Congress changes the law again. Through 2029 the limit and the income threshold each rise 1% a year: about $40,804 and $510,050 for 2027, $41,212 and $515,151 for 2028, $41,624 and $520,302 for 2029.
Do I need to itemize to get the SALT deduction?
Yes. The deduction is on Schedule A. If the standard deduction is larger than all your itemized deductions together, the cap doesn’t affect you.
Does the property tax in my escrow count?
Only what your servicer actually paid to the receiver of taxes during the year. A payment made in January counts for the year it’s made, even if the bill went out the December before.
Can I pay next year’s property tax early to deduct it this year?
Only if it has been assessed. The IRS rule is that the tax must be paid in the year and assessed before the next year begins. On Long Island the timing differs by county and bill, so ask your preparer before prepaying.
Does the SALT cap apply to a rental property?
No. Property tax on a rental or business property is deducted against that income on its own schedule, not on Schedule A, so it isn’t subject to the cap.
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Sources and citations
- 26 U.S. Code § 164(b)(6)–(7) — The SALT deduction limit law.cornell.edu
- IRS — Instructions for Schedule A (Form 1040), 2025 irs.gov
- Kiplinger — SALT deduction gets an update for 2026 taxes kiplinger.com
Last verified November 5, 2026. Tax rules change; we re-check every page each quarter.
Educational content and estimates only, not legal, tax or financial advice. Verify with your county or town receiver, an attorney or a CPA before making financial decisions.