SALT is commonly comes across when dealing with taxes, but what exactly is it? SALT is the abbreviation for State and Local Taxes. It’s especially important when you’re filing a federal income tax return and itemizing deductions.
Unless you’re living in a state without an income tax, you can write off the state and local taxes paid if you itemize deductions.
What’s included in the SALT deduction?
State and local taxes are a very broad concept. The SALT deduction is allowed for only the following types of state and local taxes.
- Income tax
- Property tax
- Sales tax
Limit of SALT deduction
The Tax Cuts and Jobs Act of 2017 put a $10,000 limit on the SALT deduction. Regardless of how much you pay in state or local taxes, the maximum amount you can claim is up to this amount. Prior to the changes brought with the TCJA, there wasn’t a limit on the deduction.