The federal deduction limit is $10,000 per year for all state and local taxes combined
The State and Local Tax (SALT) deduction lets you subtract certain taxes you paid from your federal taxable income. The cap is $10,000 per tax year, and this limit applies to the total of all state income tax, local income tax, sales tax, and property tax combined — not $10,000 for property tax alone.
If your property tax bill is $8,000 and your state income tax is $3,000, you can deduct only $10,000 total, not $11,000. You choose which taxes to count toward the limit to get the largest deduction. Most people deduct whichever combination gets them closest to $10,000.
This limit has been in place since 2018 and is set to expire at the end of 2025 unless Congress extends it. After that date, the cap would return to no limit, but that change is not yet law.
Key Takeaways
- The $10,000 SALT deduction cap covers property tax, state income tax, local income tax, and sales tax combined — you cannot deduct more than $10,000 of all four types together.
- You can choose to deduct either state income tax or sales tax (not both), then add property tax to reach the $10,000 limit.
- The deduction only helps if you itemize deductions on your federal tax return; if you take the standard deduction instead, property tax does not reduce your taxes.
- Property tax paid to your county or municipality counts toward the limit, but homeowners association fees and special assessments usually do not.
- The $10,000 cap is scheduled to expire after 2025, but Congress would need to pass new law to change it.
When property tax counts toward the $10,000 limit
Property tax you paid during the tax year counts if it was imposed by your state, county, city, or local government on real property you own. This includes the annual tax bill you receive from your county assessor's office. The tax must be based on the property's value, not a flat fee.
Special assessments — charges for local improvements like a new sidewalk or sewer line — usually do not count as property tax for this purpose. Neither do homeowners association (HOA) fees, even if your HOA collects them the same way your county collects property tax. Check your property tax bill or county assessor's website to see what portion is labeled as property tax versus special assessment.
If you own rental property or a second home, property tax on those properties counts the same way as tax on your primary residence. The $10,000 limit applies to all real property you own, combined.
How to choose between income tax and sales tax
You can deduct either state and local income tax or sales tax, but not both. Most people deduct whichever one is larger. If you live in a state with no income tax (like Florida, Texas, or Washington), you would deduct sales tax instead.
To figure out your sales tax, you can use your actual receipts from the year, or you can use the IRS sales tax tables based on your income and state. The IRS tables are usually easier. You report this choice on Schedule A of your federal tax return.
Once you decide whether to deduct income tax or sales tax, you add your property tax to that number. If your state income tax is $6,000 and your property tax is $5,000, you deduct $10,000 (the limit). If your state income tax is $8,000 and your property tax is $5,000, you still deduct only $10,000, and $3,000 of your property tax is lost.
The difference between itemizing and taking the standard deduction
The property tax deduction only works if you itemize deductions on your federal tax return. Itemizing means you list out deductions like property tax, mortgage interest, and charitable donations instead of taking the standard deduction.
The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly. If your itemized deductions (property tax plus mortgage interest plus charitable donations, and so on) add up to less than the standard deduction, you are better off taking the standard deduction, and your property tax does not reduce your federal taxes at all.
Many homeowners with moderate property tax bills find that the standard deduction is larger than their itemized deductions, so they do not benefit from the property tax deduction. A tax preparer or online tax software can show you both numbers and tell you which is larger for your situation.
Property tax paid in prior years or future years
You can only deduct property tax you actually paid during the tax year. If you paid your 2024 property tax bill in January 2025, that payment counts on your 2025 return, not your 2024 return.
Some people pay property tax in advance — for example, paying next year's bill before December 31 to deduct it this year. The IRS allows this only if you paid the tax to the government, not if you just set aside money or paid an escrow account. If your mortgage lender holds property tax in escrow and pays it on your behalf, you can deduct it in the year the lender actually paid the government, not the year you sent money to the lender.
If you receive a property tax refund in a later year (because you overpaid or your assessment was reduced), you must reduce your deduction by the refund amount on the year you receive it.
Married couples and the $10,000 limit
Married couples filing jointly have one $10,000 SALT deduction limit, not $10,000 each. If one spouse owns property in a high-tax state and the other owns property in a low-tax state, their property taxes are added together and the total cannot exceed $10,000.
Married couples filing separately each get a $5,000 limit instead of $10,000. This is almost always worse than filing jointly, so most married couples should file together to keep the full $10,000 limit.
What happens after 2025
The $10,000 SALT deduction cap was set to expire at the end of 2025. Congress has not yet passed law to extend it, so the cap may disappear after December 31, 2025, which would allow unlimited deductions of state and local taxes. However, this is not certain — Congress could let the cap expire, extend it, or change it to a different amount.
If you are planning your taxes for 2025 or beyond, check the IRS website or speak with a tax professional closer to the end of the year to see what Congress has decided. For now, the $10,000 limit applies to the 2024 tax year and any year through 2025.
Frequently Asked Questions
Can I deduct property tax if I rent my home to someone else?
No. Rental property owners cannot deduct property tax as an itemized deduction on Schedule A. Instead, they deduct property tax as a business expense on Schedule E (Rental Income and Loss). The $10,000 SALT limit does not explore to rental property — you can deduct the full amount of property tax on rental property.
Does my HOA fee count as property tax?
No. HOA fees are not property tax, even if they are collected by the HOA in the same way a county collects property tax. Only the portion of your bill labeled as property tax by your county or municipality counts toward the $10,000 limit. Check your property tax statement to see what portion is property tax versus HOA or special assessment.
What if I paid property tax for two different states in one year?
Property tax from both states counts toward the same $10,000 limit. If you paid $6,000 in property tax in State A and $5,000 in State B, your total property tax is $11,000, but you can only deduct $10,000 (assuming you have no state income tax or sales tax to count). The other $1,000 cannot be deducted.
Can I deduct property tax I paid through my mortgage escrow account?
Yes, but only in the year your lender actually paid the tax to the government. If your lender paid your 2024 property tax in January 2025, you deduct it on your 2025 return. Your mortgage statement should show when the lender paid the tax, or you can contact your lender to ask.
What if my property tax bill is more than $10,000?
You can only deduct $10,000 total for all state and local taxes combined. If your property tax alone is $12,000, you deduct $10,000 and lose the remaining $2,000 (unless you have no state income tax or sales tax, in which case you still deduct only $10,000 of the property tax). The excess cannot be carried forward to future years.