While most people focus on federal taxes, State and Local Taxes (SALT) can also have a big impact on your financial health. These taxes—such as income, property, sales, and estate taxes—vary depending on where you live or do business. With the SALT deduction now capped at $10,000 due to the 2017 Tax Cuts and Jobs Act, effective SALT planning is more important than ever. By understanding these taxes and using smart planning strategies, individuals and businesses can potentially save thousands each year.
Understand Your State and Local Tax Obligations
Taxes differ from one state or city to another. Know what types of taxes apply to you—like income, property, or sales tax—to better manage your liabilities.
Relocate or Establish Residency in a Tax-Friendly State
Moving to a state with no income tax (like Texas or Florida) can help reduce your overall SALT burden—especially if you’re from a high-tax state like California or New York.
Maximize Your SALT Deduction Within the $10,000 Cap
Even though there’s a cap, you can still benefit by keeping track of deductible taxes such as property and state income taxes. Married couples filing jointly can deduct up to $10,000.
Use Charitable Contributions Strategically
Some states offer tax credits or deductions for charitable donations. This can lower your state and local tax liability while supporting causes you care about.
Plan Business Taxes Smartly
Business structure and location can affect how much state and local tax you pay. Choosing the right entity (like LLC or S-Corp) and where you incorporate can lead to major savings.