topic SALT deduction in Deductions & credits

SALT deduction

Frustrated_in_California — Sun, 22 Feb 2026 02:03:52 GMT

in 2025 we paid California estimated income taxes for tax year 2024. When I enter the amount into TurboTax, it appears on Federal Schedule A with a 17.5% reduction. No matter what number I enter, it appears on Schedule A reduced by approximately the same percentage. But if I enter the amount as a LOCAL estimated tax for tax year 2024 paid in 2025, it appears on Schedule A without any problem in the proper amount. Our total SALT deductions are less than the $40,000 SALT cap. Our MAGI is well below the $500,000 threshold.

I have tried re-entering the numbers several times but I always have the same problem.

Thanks for any suggestions!

Re: SALT deduction

AnnetteB6 — Sun, 22 Feb 2026 13:44:18 GMT

After attempting to replicate the situation you described and failing to do so, it would be useful to have a diagnostic copy of your tax data file. The diagnostic file will not contain personally identifiable information, only numbers related to your tax forms.

If you would like to provide us with the diagnostic file, follow the instructions below and post the token number along with which version of TurboTax you are using in a follow-up thread.

Use these steps if you are using TurboTax Online:

Sign in to your account and be sure you are in your tax return.
Select Tax Tools in the menu to the left.
Select Tools.
Select Share my file with agent.
A pop-up message will appear, select OK to send the sanitized diagnostic copy to us.
Post the token number here.

If you are using a CD/downloaded version of TurboTax, use these steps:

Select Online at the top of the screen.
Select Send Tax File to Agent.
Click OK.
Post the token number here.

If you are using a Mac version of TurboTax, use these steps:

Go to the Menu at the top of the screen and select Help.
Then, Send Tax File to Agent.
Post the token number here.

Re: SALT deduction

Frustrated_in_California — Sun, 22 Feb 2026 19:24:55 GMT

Thanks for looking at this issue!

I have provided the diagnostic file. THE TOKEN NUMBER IS 1332852

I am using the PREMIUM ONLINE VERSION.

Re: SALT deduction

AnnetteB6 — Sun, 22 Feb 2026 20:23:39 GMT

Thank you for providing your diagnostic file and token number.

I was able to take a look at your file and I understand why it appears that the state estimated payment made in 2025 for 2024 is being reduced. It appears to be reduced on Schedule A because it actually is reduced because you received a refund for your 2024 state taxes.

Since a portion of your total tax payments and withholdings to the state for your 2024 return was actually paid in 2025, a portion of the tax refund you received must be allocated to 2025 as well. Then, that allocated amount of your refund is used to adjust the payment that was made in 2025. Without making this adjustment, it would be possible for a taxpayer to artificially inflate their deductions for the current tax year by overpaying their 4th quarter estimated payment in January.

In your case, the amount of your state refund for 2024 divided by your total tax payments and withholdings did come out to be about 17.6%. Therefore, the estimated payment made in 2025 was reduced by that same percentage before it was included on Schedule A as part of your itemized deductions.

The State and Local Income Tax Worksheet (St Refund Wks) included as part of your return shows the numbers involved in the calculation. You can print this form by choosing it specifically in the Print Menu option after your TurboTax Online fee has been paid.

@Frustrated_in_California

Re: SALT deduction

Frustrated_in_California — Sun, 22 Feb 2026 20:32:34 GMT

That makes total sense. Thank you so much!!

Re: SALT deduction

user17722290203 — Fri, 27 Feb 2026 22:02:42 GMT

Thanks for the explanation of how the limitation is applied and where to find the applicable worksheet. I do think there is a problem with this interpretation in cases where no benefit was derived from state income taxes in 2024 which capped SALT at $10,000 and the taxpayer had other taxes (real estate, sales etc.) that exceeded the SALT limit. As a cash basis taxpayer, I get to deduct the estimated payment in the year paid regardless if inflated or not because any tax benefit that is refunded is included in income in the year received. I revised IRS Pub 525 - Worksheet 2 (specifically Recoveries of Itemized Deductions) which makes no reference to allocation of estimated tax payments.