The SALT Cap and Rent vs Buy

The 2026 SALT cap is $40,400, phasing down above $505,000 of income. What it changes in rent-vs-buy math: nothing on a $420,000 home, about $21,000 at $1.1M.

Written by Jonathan Nyst Updated August 2026 3 min read Taxes Every figure re-runnable

The SALT cap for tax year 2026 is $40,400 — quadruple the old $10,000 limit — and for most home buyers it changes the rent-vs-buy math by exactly nothing. Property tax on our model’s default $420,000 home is about $4,620 a year, nowhere near either cap, and the buyer doesn’t clear the standard deduction anyway. Where it does bite is expensive markets: on our $1.1M expensive-city scenario, the raised cap improves buying’s side of the ledger by about $21,000 over 15 years — and renting still wins by about $561,000.

What is the SALT cap in 2026?

SALT is the itemized deduction for state and local taxes — property tax plus state income (or sales) tax. The One Big Beautiful Bill Act lifted the cap from $10,000 to $40,000 for 2025, rising 1% a year: $40,400 in 2026 ($20,200 married filing separately), reaching $41,624 by 2029, then reverting to $10,000 in 2030 unless Congress acts again.

The catch is the phase-down: above $505,000 of modified adjusted gross income in 2026, the cap shrinks by 30 cents per dollar of income until it hits a $10,000 floor at roughly $606,000. High earners in high-tax states — the people the raise sounds designed for — are precisely the ones phased back to the old cap. Our model applies the $40,400 cap to property tax directly and doesn’t model the income phase-down, so if you earn over $505,000, its itemizing scenarios are optimistic about your deduction.

Does the SALT cap change whether you should buy?

At typical prices, no — because the cap isn’t the binding constraint, the standard deduction is. A deduction only helps to the extent that itemizing beats the standard deduction ($16,100 single, $32,200 married in 2026). On the default $420,000 home, year-one mortgage interest of about $21,700 plus $4,620 of property tax gets a married couple to $26,320 — still short of their standard deduction, so their SALT deduction is worth zero regardless of any cap. The full mechanics of that trap are in does the mortgage interest deduction still matter.

A single filer does clear the bar: our model has itemizing narrow renting’s ten-year win from about $67,000 to about $36,000 on the default scenario — roughly $22,400 of tax savings. Note what did the work, though: it’s the mortgage interest driving that, and the $4,620 of property tax fit comfortably under the old $10,000 cap too. The 2026 raise added nothing.

Where does the higher cap actually matter?

Expensive homes, where property tax alone breaks $10,000. Our expensive-city scenario — $1.1M home, $12,100 a year of property tax, married couple itemizing — is the textbook case: under the old cap, $2,100 of that property tax was non-deductible every year. Rerun the 15-year scenario both ways and the raised cap improves the buying side by about $21,000:

That $21,000 is real — and it’s also a rounding error against the $561,000 verdict. The expensive-city math is decided by price-to-rent ratios and opportunity cost, not by tax policy; the 2026 SALT raise softened buying’s loss there without coming close to reversing it.

What our model does and doesn’t count

Honest accounting requires saying both. The model counts property tax toward the SALT cap, compares itemizing against your standard deduction every year, applies the $750,000 mortgage-interest cap, and only credits the buyer with the excess over the standard deduction — the delta that actually changes a tax bill. It does not model your state income tax (which shares the same cap and may already fill it — in which case your property tax adds nothing), and it doesn’t model the high-income phase-down. Both simplifications tend to overstate buying’s tax benefit, which is the conservative direction for a site whose default verdict favors renting.

Run your own numbers

Every tax input is editable: open the calculator, set your filing status and standard deduction, toggle itemizing, and the verdict updates with the 2026 caps applied. If your property tax plus state income tax exceeds $40,400, or your income is over $505,000, read the result knowing the model is being generous to the buying side — details on the methodology page. For what happens at the other end of ownership, see capital gains when you sell.

Jonathan Nyst

Jonathan Nyst built RentVsBuyMath as an independent project — for himself first. He spent fifteen years marketing financial products, in banking, fintech and payments at CMO level, which is exactly how he knows what a lead-generation calculator looks like from the inside. This is the calculator without the funnel: he is not a lender, broker or agent, the site takes no referral fees, and nobody is paid more if you decide to buy. The whole model is public — every formula documented on the methodology page, the engine MIT-licensed, covered by automated tests including scenarios computed by hand to check it.