In analyzing filings for prior years, the IRS documented that nearly a third of all taxpayers have itemized deductions. Of those who do, nearly all of them take the SALT deduction.  
Prior to the Tax Cuts and Jobs Act (TCJA), taxpayers were allowed an itemized deduction for the following taxes held for personal use without limitation:
  • State, local, and foreign real property taxes.
  • State and local personal property taxes.
  • State, local, and foreign income, war profits, and excess profits taxes. 
In addition, taxpayers could elect to deduct state and local general sales taxes, in lieu of state and local income taxes. Of the taxes described above the primary component that drives the deduction is typically the real property taxes.  

The Tax Cuts and Jobs Act, passed in December of 2017, limits the state and local tax deduction to $10,000 ($5,000 if married filing separately). This deduction limitation is applied to the combined state/local income taxes (or general sales taxes), real estate taxes, and personal property taxes. The limitation does not apply to foreign income taxes and other taxes. 

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