Should You Itemize in 2026? SALT Cap Calculator
The SALT cap jumped from $10,000 to $40,000. For homeowners in high-tax states, itemizing might finally make sense again. Calculate your savings.
The 2026 SALT Cap Change: What Happened
The OBBBA raised the State and Local Tax (SALT) deduction cap from $10,000 to $40,000 for tax years 2025 through 2029 (reverting to $10,000 in 2030). This is the most significant change for homeowners in high-tax states since the original TCJA cap was imposed in 2018.
The increased cap is available to taxpayers with modified adjusted gross income under $500,000. Above that threshold, the cap is reduced by 30 cents for every dollar of income over $500,000, but never falls below $10,000. For married filing separately, the cap is $20,000 with a $250,000 phase-out threshold.
Who Benefits Most from the New SALT Cap?
The biggest beneficiaries are homeowners in high-tax states who were previously "capped out" at $10,000. Typical profiles that benefit most include dual-income households in California, New York, New Jersey, Connecticut, and Illinois with combined state income tax and property tax exceeding $15,000-20,000. Many of these households switched to the standard deduction under the old $10K cap — the $40K cap may make itemizing worthwhile again.
Should You Itemize in 2026?
Itemizing only benefits you if your total itemized deductions exceed the standard deduction ($16,100 single, $32,200 MFJ in 2026). The key components are SALT (now up to $40K), mortgage interest, and charitable contributions. This calculator compares your total itemized deductions against the standard deduction and tells you which is better.
About 14% of taxpayers are expected to itemize in 2026 under the OBBBA, compared to about 32% that would have itemized if the TCJA had expired entirely. The expanded SALT cap brings some taxpayers back to itemizing, but the higher standard deduction still makes the standard deduction better for most Americans.
The Pass-Through SALT Workaround
The OBBBA preserved the pass-through entity SALT deduction workaround that many states adopted after the original $10K cap. Business owners operating through S-corps and partnerships can continue to deduct state taxes at the entity level without being subject to the individual SALT cap. If you own a pass-through business, consult with your CPA about whether the entity-level election or the individual $40K cap provides a better result.
Under the old $10K SALT cap, about 90% of taxpayers took the standard deduction. The new $40K cap is expected to shift about 3-4% of filers back to itemizing — primarily dual-income homeowners in CA, NY, NJ, CT, and IL with combined state taxes and property taxes exceeding $20,000.
