The 2026 SALT Cap Jumped to $40,400 — Enough to Flip Many Households Back to Itemizing

A rule change that quietly flips the default for high-tax-state homeowners

We ran $25,000 in SALT, $18,000 in mortgage interest, $8,000 in cash charity, and $5,000 in medical expenses through the calculator at a $180,000 AGI, married filing jointly. Total itemized: $50,100, against a $30,000 standard deduction — itemizing wins by $20,100. Under the old $10,000 SALT cap, this same household would have deducted only $10,000 of that $25,000 in state and local taxes, dropping total itemized well below the standard deduction and making the standard the obvious default. The 2025 SALT cap expansion to $40,400 (2026) didn’t just raise a number — it flipped the right answer for a lot of households who’d stopped itemizing years ago.

How the math works

The 2026 SALT cap: cap = max($10,000, $40,400 − 30% × max(0, AGI − $505,000)) — for every dollar of AGI above $505,000, the expanded cap shrinks by 30 cents, bottoming out at the old $10,000 floor. Medical expenses only count above 7.5% of AGI; charitable cash gifts are capped at 60% of AGI and — new for 2026 — only the amount above a 0.5%-of-AGI floor counts at all.

What this tool doesn’t model: non-cash charitable gifts (appreciated stock, property — different rules apply), mortgage insurance premium deductibility, the Alternative Minimum Tax interaction (which historically clawed back some itemized deductions for certain high earners), or state-level itemizing rules, which often diverge from federal.

Math runs locally. Inputs never leave your browser. Source on github.

Where this doesn’t apply

• Your AGI is well above $505,000. The SALT cap phase-down erodes most of the 2025 expansion’s benefit at high incomes — run the numbers rather than assuming the higher cap applies in full.
• You live in a low-tax state with no mortgage. Without significant SALT or mortgage interest, the standard deduction usually still wins comfortably — the 2025 change mainly matters for high-property-tax or high-income-tax-state homeowners.
• You’re giving appreciated stock, not cash. Non-cash gifts have their own valuation and AGI-limitation rules (generally 30% of AGI, not 60%) — this tool models cash gifts only.
• Your total deductions are close to the standard deduction either way. When the gap is small, the extra recordkeeping burden of itemizing may not be worth it even if itemizing technically wins by a modest margin.

What to actually do

1. Pull your actual SALT, mortgage interest, and charitable giving figures from last year’s return rather than estimating.
2. If you stopped itemizing after 2017, rerun the numbers now — the 2025 SALT cap expansion may have flipped the answer.
3. If your AGI is near $505,000, check both sides of the SALT phase-down carefully, since it meaningfully changes the deductible amount.
4. If charitable giving alone isn’t clearing the gap, look at bunching several years of gifts into one — see the Charitable Bunching Strategy calculator.
5. Revisit the comparison every year — both the standard deduction and the SALT cap figures are scheduled to change through 2029.