Did the SALT deduction cap increase in 2026?

Yes. The state and local tax (SALT) deduction cap was raised significantly under the One Big Beautiful Bill Act (OBBBA). Here is what changed:

• Old cap (TCJA, 2018-2025): $10,000 per return (single or married filing jointly — same limit for both)
• New cap (OBBBA, 2025-2029): $40,400 for tax year 2026, indexed annually for inflation through 2029

For 2025, the cap was raised to $40,000 before the inflation adjustment. For 2026, it rises to $40,400.

What counts as SALT?

SALT includes:

• State and local income taxes (or sales taxes, if you elect that instead)
• Property taxes on your primary and secondary homes

You cannot deduct all four — you pick the best combination up to the cap.

Who benefits most?

Higher SALT caps matter most to homeowners in high-tax states like New York, California, New Jersey, and Connecticut, where property taxes and state income taxes routinely exceed $10,000. Under the old $10,000 cap, many of these households could not fully deduct what they paid. The new $40,400 cap restores that deductibility for most middle-to-upper income homeowners in these states.

Important caveat: You must itemize to claim the SALT deduction. If your total itemized deductions are still below the standard deduction ($32,200 for married filing jointly in 2026), taking the standard deduction remains the better option.