By Benjamin Finnerty (S), REALTOR® (RS-83812) with Keller Williams Realty Maui · Kīhei, Maui · 808-481-9748

Quick Answer: For tax year 2026, the federal SALT cap (the limit on deducting state and local taxes, including Hawaiʻi income tax and Maui property tax) is $40,400, or $20,200 if married filing separately. It phases down for modified adjusted gross income above $505,000, never below $10,000, and is scheduled to return to $10,000 in 2030.

I’m Benjamin Finnerty, a REALTOR® in Kīhei with Keller Williams Realty Maui, and here’s what the 2026 SALT cap and the other homeowner tax changes mean if you own on Maui or plan to buy before year-end. Hawaiʻi has a state income tax, and Maui owners pay county property tax, so the SALT cap is one of the federal rules that most directly touches the cost of owning here.

What is the SALT cap for 2026?

The 2026 SALT cap is $40,400 ($20,200 married filing separately), up 1% from $40,000 in 2025. The 2025 figure comes from IRS Publication 530; the 2026 figure reflects the 1% annual increase in the 2025 tax law (reported by Kiplinger and CNBC as of fall 2026).

Tax year	SALT cap (single/joint)	Married filing separately	Phase-down starts above (MAGI)
2025	$40,000	$20,000	$500,000
2026	$40,400	$20,200	$505,000
2030 (scheduled)	$10,000	$5,000	No phase-down

Above the income threshold, the cap shrinks by 30% of the excess income, but not below $10,000. For example, at $605,000 of modified AGI in 2026, the cap would be $40,400 minus $30,000, or $10,400.

Does the SALT cap matter if I take the standard deduction?

No. The SALT deduction only helps if you itemize. For 2026, the standard deduction is $32,200 for joint filers and $16,100 for single filers (IRS, October 2025). Your SALT deduction, mortgage interest and other itemized deductions together need to beat that number for itemizing to pay off.

On Maui, mortgage interest often decides it. With the Freddie Mac 30-year average at 7.40% as of October 8, 2026, a $750,000 loan would generate roughly $55,000 of interest in its first year, well above the standard deduction on its own.

Here’s a simple hypothetical: joint filers pay $16,000 in Hawaiʻi income tax and $4,000 in Maui property tax, for $20,000 of state and local taxes. Under the old $10,000 cap, half of that was not deductible. Under the 2026 cap, all $20,000 counts, as long as their income is below the phase-down threshold and they itemize.

How much mortgage interest can Maui buyers deduct?

Interest on up to $750,000 of acquisition debt ($375,000 married filing separately) for loans taken out after December 15, 2017, per IRS Publication 530. The 2025 tax law made this tighter limit permanent.

That matters on Maui, where prices push many loans past $750,000. The REALTORS® Association of Maui reports a countywide single-family median of $1,219,000 for January through September 2026. With 20% down, that’s a loan of about $975,200, so only about 77% of the interest (the share on the first $750,000) would be deductible.

Is mortgage insurance deductible again in 2026?

Yes. Starting in tax year 2026, mortgage insurance premiums can again be deducted as mortgage interest for those who itemize, after the deduction expired at the end of 2021. Income limits apply. This is most relevant to buyers putting less than 20% down; see my guide to first-time homebuyer programs on Maui for low-down-payment options.

What happened to the federal solar tax credit for Maui homes?

It ended. Per IRS Publication 530, the residential clean energy credit can’t be claimed for expenditures made after December 31, 2025, and the energy-efficient home improvement credit can’t be claimed for property placed in service after that date. If you’re buying a Maui home and planning to add rooftop solar or a battery, don’t count on the federal credit in your budget.

My Take: What I’m Telling Buyers and Owners

If you’re buying before December 31, 2026, ask your CPA how a closing this year versus next year changes your itemized deductions. Your settlement statement shows prorated property tax and any prepaid interest, and those details feed directly into your return. Bring it to your tax preparer instead of filing it away.

If you already own on Maui, make sure your property is classified correctly. The Maui homeowner exemption and owner-occupied rates can lower your property tax bill, and the filing deadline is December 31; I explain it in my post on Maui’s December 31 property tax exemption deadline. A lower tax bill is worth more than a bigger deduction for the same tax.

If you’re moving here from a state with no income tax, Hawaiʻi income tax will be new for you, and it counts toward the SALT cap. My guide to Hawaiʻi income tax when you move to Maui covers the basics. And because the higher cap is scheduled to drop back to $10,000 in 2030, I’d encourage anyone running long-term ownership numbers to model both scenarios.

General information, not tax or legal advice; confirm with a CPA or Hawaiʻi attorney.

FAQ

What is the SALT deduction limit for 2026?

$40,400 ($20,200 married filing separately), reduced for modified AGI above $505,000 but not below $10,000.

Does Maui property tax count toward the SALT cap?

Yes. State and local income, sales and real property taxes are combined under one overall limit, per IRS Publication 530.

What is the mortgage interest deduction limit on a Maui home?

Interest on up to $750,000 of acquisition debt for loans taken out after December 15, 2017 ($375,000 married filing separately).

When does the SALT cap go back to $10,000?

It’s scheduled to return to $10,000 starting in 2030 unless Congress changes the law.

Ask Benjamin

If you’re comparing what it will cost to own a specific Maui home or condo, I’m Benjamin Finnerty, and I’m happy to put together the property tax, HOA and payment numbers for you to review with your CPA. Call or text 808-481-9748 or email benjamin@the808team.com.

Sources: IRS Publication 530 (2025); IRS news release IR-2025-103 (2026 standard deduction); Tax Foundation; Kiplinger (updated Aug. 15, 2026); CNBC (Oct. 7, 2026); Freddie Mac PMMS (Oct. 8, 2026); REALTORS® Association of Maui, September 2026 Monthly Indicators.