SALT Deduction (State and Local Taxes)
Definition
An itemized deduction for state and local taxes paid, including state income taxes (or sales taxes) and property taxes. The Tax Cuts and Jobs Act of 2017 capped this deduction at $10,000 ($5,000 for married filing separately) through 2025. This cap particularly affects taxpayers in high-tax states like New York, California, and New Jersey.
Example
If you paid $8,000 in state income tax and $7,000 in property tax ($15,000 total), you can only deduct $10,000 due to the SALT cap.
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