Tax · free calculator
SALT cap impact calculator
Quantify the federal tax loss from the $10,000 State and Local Tax (SALT) deduction cap — comparing actual paid vs deductible cap.
Annual federal tax loss
Show the work
- Total SALT paid$21,000
- Deductible portion$10,000
- Disallowed SALT$11,000
SALT cap — the $10k ceiling that hits high-tax states
The 2017 Tax Cuts and Jobs Act capped the State and Local Tax (SALT) deduction at $10,000 ($5k for married filing separately). Before TCJA, state income tax + property tax was fully deductible against federal AGI. The cap is set to expire after 2025 — but politics may extend.
Who's hit hardest
- High-state-tax + high-property-tax: NJ, NY, CT, CA, MA homeowners
- Mortgage holders with $700k+ homes (high property tax)
- High earners in income-tax states (state income tax alone often >$10k)
The annual loss
For a NJ homeowner paying $14k property tax + $11k state income tax = $25k SALT, only $10k is deductible. $15k disallowed × 32% federal marginal rate = $4,800/yr lost vs the pre-TCJA world.
Workarounds (limited)
- Pass-through entity (PTE) tax: 30+ states allow LLCs/S-corps to pay state tax at the entity level (deductible federally as business expense, bypassing SALT cap). Owners get a credit on personal state return. Major workaround for self-employed.
- Charitable funds disguised as tax payments: NJ tried this — IRS struck it down.
- Move to a no-tax state: TX, FL, NV, WA, TN — eliminates state income tax entirely. Full SALT cap absorbed by property tax; effective only for very-high-earners with low property tax.
What's NOT subject to the cap
- Foreign tax credit (separate from SALT)
- Self-employment tax (already its own deduction line)
- Mortgage interest (separate cap of $750k loan post-TCJA)
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