Which taxes you can deduct, and the SALT cap
Income, sales, property and other taxes on Schedule A, the two tests every tax must pass, and the cap on state and local taxes for 2023, 2024, 2025 and 2026 planning.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on October 26, 2026.
Chapter 11 tells you which taxes you can claim as itemized deductions on Schedule A, and which you cannot. It helps most if you own a home or live in a state with high taxes. It is on printed pages 96 to 100 of the 2025 edition (97 to 101 in 2023 and 2024). Think of this page as a friendly summary; the IRS publication has the last word.
- The tax must be charged to you, and you must pay it within the tax year you claim it.
- Pick one: state and local income tax, or general sales tax. You cannot deduct both.
- Real estate tax and yearly value-based personal property tax count too, all under one cap.
- The cap was $10,000 for 2023 and 2024 and $40,000 for 2025, shrinking at high incomes.
- Federal income tax, the Social Security and Medicare taxes taken from pay, and HOA dues are not deductible.
What goes where
| Tax | Deduct it? | Watch for |
|---|---|---|
| State and local income tax | Yes, Schedule A line 5a | Withholding and estimates count in the year paid |
| General sales tax | Yes, line 5a, instead of income tax | Actual receipts or IRS tables |
| Real estate tax | Yes, line 5b | Split by days owned in a year you buy or sell |
| Personal property tax | Yes, line 5c | Only a yearly tax based on value |
| Federal income tax, Social Security, Medicare | No | Half of self-employment tax is a separate deduction |
| HOA dues, itemized trash fees, transfer taxes | No | Fees and costs, not property tax |
The tests and the sale-year split
Payment timing follows the day you hand over a check or the date a card charge posts. When a home changes hands during the year, the year's real estate tax is split by days of ownership; the seller's share runs up to the day before closing. Delinquent taxes from earlier years are not split; a buyer adds them to the home's cost.
Numbers by year
| Year | Cap | Cap, married filing separately | Cap shrinks when MAGI is above |
|---|---|---|---|
| 2023 | $10,000 | $5,000 | not applicable |
| 2024 | $10,000 | $5,000 | not applicable |
| 2025 | $40,000 | $20,000 | $500,000 ($250,000 separate) |
| 2026 planning | $40,400 | $20,200 | $505,000 ($252,500 separate) |
From 2025 the cap falls by 30 percent of modified adjusted gross income (MAGI) above that line, but never below $10,000 ($5,000 separate). For 2026, treat the numbers as planning figures (source: IRS Publication 505 (2026) and the 2025 law), since the IRS has not issued Pub 17 (2026).
An invented example
The Garcias file jointly for 2025 with MAGI of $210,000 (invented). They paid $14,000 of state income tax, $9,500 of real estate tax and $300 of car personal property tax, a total of $23,800. The 2025 cap is $40,000, so all $23,800 counts on Schedule A. The same bills on a 2024 return would be limited to $10,000. They still compare the Schedule A total with the 2025 standard deduction of $31,500.
Mistakes people make
- Deducting what the lender escrowed instead of what it paid the taxing authority.
- Deducting both income tax and sales tax.
- Deducting HOA dues, flat trash fees or transfer taxes.
- Skipping the buyer and seller split in the year you buy or sell.
Quick check
2024, married filing jointly: state income tax $11,200 and property tax $8,300. What can you deduct?
Answer: $10,000. The taxes total $19,500, but the 2024 cap is $10,000.
2025, married filing jointly, MAGI $520,000, state and local taxes $45,000. What can you deduct?
Answer: $34,000. MAGI is $20,000 over $500,000, so the cap falls by 30 percent of $20,000 = $6,000, from $40,000 to $34,000.
2025: are homeowners association dues deductible as property tax?
Answer: No. The association charges them, not a government.
Common questions
My lender pays my property tax from escrow. What do I deduct?
Only the tax it actually paid the taxing authority. Ask the lender or the tax office if you are unsure.
Is my state refund taxable?
Only if you itemized the year you paid that tax, and Pub. 525 sets how much. On the 2023 to 2025 forms it goes on Schedule 1 line 1. After a standard-deduction year, leave it out.
Is the higher cap permanent?
No. The law sets $40,000 for 2025 and $40,400 for 2026, raises it 1 percent a year for 2027 to 2029, and returns it to $10,000 in 2030.
Official sources
- IRS Publication 17 (2025), chapter 11
- IRS Publication 17 (2024), chapter 11
- IRS Publication 17 (2023), chapter 11
- IRS Publication 505 (2026), tax withholding and estimated tax
- Public Law 119-21 (2025), section 70120
Keep reading
- Standard Deduction 2023 to 2026: Pub 17 Chapter 10
- Other Itemized Deductions: Pub 17 Chapter 12
- How to Figure Your Tax (Pub 17 Chapter 13)
- Key Tax Numbers by Year, 2023 to 2026
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