For the 2025 tax year, Schedule A allows taxpayers to itemize deductions for state and local taxes (SALT), which include:
- State and local income taxes
- General sales taxes (in lieu of income taxes)
- Real estate taxes
- Personal property taxes
Taxpayers may deduct either state and local income taxes OR general sales taxes, but not both for the same tax year.
The total SALT deduction is subject to a limitation of:
- $40,000 for Single, Married Filing Jointly, and Head of Household
- $20,000 for Married Filing Separately
This limit is reduced for taxpayers with modified adjusted gross income (MAGI) above $500,000 ($250,000 if MFS), but will not be reduced below $10,000 ($5,000 if MFS).
State and Local Income Taxes (Line 5a)
Include the following amounts paid in 2025:
- State and local income taxes withheld from wages (Forms W-2, W-2G, 1099-G, 1099-R, 1099-MISC, 1099-NEC)
- State and local income taxes paid in 2025 for a prior year (for example, with a 2024 return), excluding penalties and interest
- Estimated state and local income tax payments made during 2025
- Any portion of a prior-year refund applied to 2025 state or local taxes
- Mandatory contributions to specific state disability funds (e.g., CA, NJ, NY, RI, WA funds listed by IRS)
Do not include:
- Amounts deducted elsewhere (Schedule C, E, or F)
- Federal income taxes
- Penalties or interest
State and Local General Sales Taxes (Line 5a – Election Alternative)
Instead of deducting income taxes, taxpayers may elect to deduct state and local general sales taxes.
You may compute this deduction using:
- The optional state and local sales tax tables, or
- The actual sales taxes paid (supported by records)
Taxpayers using the optional tables may add sales tax paid on certain specified items, including:
- Motor vehicles (including leased vehicles)
- Boats and aircraft (if taxed at general rate)
- Homes or substantial home improvements (subject to IRS conditions)
If you lived in more than one state or locality during 2025, you must allocate the deduction based on time lived in each location.
This election applies only for the current tax year.
State and Local Real Estate Taxes (Line 5b)
Deduct real estate taxes paid in 2025 only if they:
- Are imposed on real property you own
- Are based on assessed value
- Are assessed uniformly
- Are used for general governmental purposes
Do not include:
- Foreign real estate taxes
- Charges for services (trash, water, etc.)
- Assessments for improvements (e.g., sidewalks), unless for maintenance
If you receive a refund of real estate taxes:
- Refunds of current-year payments reduce the deduction
- Refunds of prior-year deducted taxes are included in income under the tax benefit rule
State and Local Personal Property Taxes (Line 5c)
Deduct personal property taxes paid in 2025 only if they are:
- Based on value alone, and
- Imposed on a yearly basis
Example:
- The value-based portion of vehicle registration fees is deductible
SALT Deduction Limitation (Line 5e)
Add lines 5a, 5b, and 5c and enter the total on line 5d.
If Line 5d is $10,000 or less ($5,000 if MFS):
- Enter the full amount on line 5e
- No worksheet required
If Line 5d exceeds $10,000 ($5,000 if MFS):
Case 1 – MAGI ≤ $500,000 ($250,000 if MFS):
- Enter the smaller of:
- Line 5d, or
- $40,000 ($20,000 if MFS)
Case 2 – MAGI > $500,000 OR foreign exclusions apply (Form 2555 / 4563 / Puerto Rico income):
- Complete the State and Local Tax Deduction Worksheet:
Worksheet Mechanics (IRS 2025):
- Line 1: $40,000 ($20,000 if MFS)
- Line 2: AGI (Form 1040, line 11)
- Lines 3a–3d: Add foreign income exclusions and Puerto Rico income
- Line 4: Modified AGI
- Line 5: Threshold ($500,000 / $250,000)
- Line 6: Excess MAGI
- Line 7: Multiply excess by 30%
- Line 8: Reduce Line 1 by Line 7
- Line 9: Greater of Line 8 or $10,000 ($5,000 if MFS)
- Line 10: Final deduction = smaller of Line 9 or Line 5d
Source:
Schedule A Instructions (2025)
Disclaimer: Always verify details with the official IRS Form and Instructions for the current tax year. For complex situations, consult a CPA or tax attorney.