Can taxpayers deduct state and local taxes (SALT) on their federal return?

Taxpayers can indeed deduct state and local taxes (SALT) on their federal tax return, but this deduction is subject to a cap. Specifically, the Tax Cuts and Jobs Act of 2017 placed a limit on the SALT deduction, setting it to a maximum of $10,000 for married couples filing jointly and $5,000 for married individuals filing separately. This limit encompasses the total of state and local income taxes, sales taxes, and property taxes deducted.

This deduction is available to those who itemize their deductions on Schedule A of the tax return. Therefore, taxpayers who do not itemize cannot claim the SALT deduction at all. Some may find it beneficial to itemize depictions if their allowable itemized deductions exceed the standard deduction, thus potentially making the SALT deduction a valuable part of their overall tax strategy.