State and Local Tax Deduction

If you’re live in the states other than the ones that do not impose a state income tax, you are bound to file a tax return just like for your federal income taxes. While you can claim a standard deduction on your federal income tax return to reduce taxable income, it isn’t really the case with the state tax deductions.

The same applies to state returns when it comes to deductions. If you itemize, you won’t be able to claim the standard deduction. Even if there was a standard deduction for states which there is. But it really isn’t something to bother and look at, you pay state taxes on a regular basis. Most of the state and local taxes you pay are actually tax-deductible.

So even if you have a portion of your income in state income tax, you can get more out of it. This includes state and local taxes altogether. This is also known as the SALT deductions.

SALT Deduction for Married and Single Filers

In 2020 and possibly for the next a couple of years, you can claim up to $10,000 in SALT deductions. This reduces your state taxable income just like any other tax deduction. However, it isn’t like taking the standard deduction. If there are any other tax deductions you can claim, go ahead. You will reduce taxable income even more.

One thing to pay attention to here is your filing status. The SALT deduction is capped at $10,000 but only for single filers. If you’re married filing jointly, it isn’t doubled, it will remain as it is. If you file separately, on the other hand, both you and your spouse will only be able to deduct $5,000 each.

With that being said, you will only need $2,400 in order itemized deductions to make itemizing worth for you as a single filer. For married filers whether filing jointly or separately, SALT deductions may not be that worth it. Especially considering the standard deduction for joint filers in 2024 is $24,800.