What is SALT Deduction?
Definition The SALT deduction is the itemized deduction for state and local taxes, including state income or sales taxes plus property taxes. Current law caps the total amount that can be deducted, which limits its value for taxpayers in high-tax states. Many states have created pass-through entity taxes as a workaround for business owners.
The cap significantly affects clients in high-tax states, making pass-through entity tax elections a widely used planning response for firms to evaluate.