What is the SALT deduction cap and how does it affect itemized deductions?

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Multiple Choice

What is the SALT deduction cap and how does it affect itemized deductions?

The SALT deduction cap sets a limit on how much you can deduct for state and local taxes when you itemize deductions on your federal return. Under current law, that cap is $10,000 per tax return ($5,000 if married filing separately). It applies to the total deduction for state and local taxes, including property taxes and either state income taxes or local sales taxes. If your SALT payments exceed $10,000, only up to $10,000 can be deducted. This reduces the value of itemizing for many taxpayers in higher-tax states, and in some cases makes taking the standard deduction more advantageous. For example, if you owe $12,000 in SALT, you can deduct only $10,000.

The SALT deduction cap sets a limit on how much you can deduct for state and local taxes when you itemize deductions on your federal return. Under current law, that cap is $10,000 per tax return ($5,000 if married filing separately). It applies to the total deduction for state and local taxes, including property taxes and either state income taxes or local sales taxes. If your SALT payments exceed $10,000, only up to $10,000 can be deducted. This reduces the value of itemizing for many taxpayers in higher-tax states, and in some cases makes taking the standard deduction more advantageous. For example, if you owe $12,000 in SALT, you can deduct only $10,000.

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