Quick answer: For 2026, the federal SALT deduction cap is $40,400 for most filers, up from $10,000 before 2025. The cap shrinks for modified adjusted gross income above $505,000 but never falls below $10,000. You only benefit if you itemize instead of taking the standard deduction.
For years, the federal deduction for state and local taxes was capped at $10,000. That limit hit Loudoun County households hard because of high home values and Virginia income tax. The cap is now much higher, but not for everyone.
What changed
The SALT deduction covers state income tax, real estate tax and personal property tax based on value, such as the Loudoun County tax on your car.
| Tax year | SALT cap (married filing jointly or single) | Phase down starts (MAGI) |
|---|---|---|
| 2018 to 2024 | $10,000 | No phase down |
| 2025 | $40,000 | $500,000 |
| 2026 | $40,400 | $505,000 |
| 2027 to 2029 | Rises 1% each year | Rises 1% each year |
| 2030 | Returns to $10,000 | No phase down |
Married couples filing separately get half of these amounts, with a phase down that starts at half the income threshold.
Why it matters in Loudoun County
A typical Ashburn household pays real estate tax (due June 5 and December 5), personal property tax on vehicles (due May 5 and October 5) and Virginia income tax at rates up to 5.75%. Many families went well past $10,000 in these taxes each year, so the higher cap can bring back a meaningful deduction.
The income phase down
Higher earners lose part of the increase. The cap is reduced by 30% of modified adjusted gross income above the threshold for that year: $500,000 for 2025 and $505,000 for 2026. It generally cannot fall below $10,000 ($5,000 for married filing separately), so households with income around $600,000 or more are back to the old limit.
Should you itemize again?
You only benefit from the SALT deduction if you itemize. That makes sense when your SALT, mortgage interest and charitable gifts together exceed your standard deduction. For 2026, the standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers.
Many Loudoun County homeowners with a mortgage now find that itemizing beats the standard deduction again.
Virginia note: Virginia adds back the state income tax you deducted on your federal return, so your Virginia itemized deductions will not match your federal ones.
Planning ideas
- Pay your December real estate bill on time so it counts in that year
- Group charitable gifts into one year to push itemized deductions higher
- If you own a pass through business, look at the Virginia PTET election, which works around the cap
SALT cap FAQs
What is the SALT cap for married filing separately in 2026?
It is $20,200, half of the $40,400 cap. The income phase down for separate filers starts at $252,500, and the cap cannot drop below $5,000.
At what income does the SALT cap start to phase down in 2026?
The phase down starts at $505,000 of modified adjusted gross income. The cap is reduced by 30% of income above that amount until it reaches the $10,000 floor.
Can I deduct both state income tax and sales tax?
No. You choose either state and local income tax or general sales tax, then add property taxes. Most Virginia residents deduct income tax because it is usually larger.
Is property tax on a rental home subject to the SALT cap?
No. Real estate tax on a rental property is a rental expense on Schedule E, so it is not counted toward the SALT cap that applies to your own home.
When does the higher SALT cap end?
Under current law, the higher cap rises 1% a year through 2029 and returns to $10,000 starting in 2030.
Make sure you take the bigger deduction
Our individual tax preparation service compares itemizing and the standard deduction for you every year. If your income is near the phase down range, our tax planning can help with timing.
This article is general information and not tax advice for your situation. Tax rules change, so talk with a qualified professional before making decisions.
