Salinity in irrigation water limits vegetable production in arid and semi-arid regions, where farmers often rely on marginal-quality sources. Capsicum and green chili, classified as moderately sensitive to salt stress, were evaluated in a three-year polyhouse experiment using drip irrigation with varying salinity levels in a randomized complete block design. Increasing irrigation water salinity reduced fruit yield in both crops. This decline stemmed primarily from elevated Na+ accumulation in soil, roots, and shoots, leading to higher soil electrical conductivity (ECe). Applying the Maas - Hoffman model, yield reductions started at soil salinity thresholds of 2.2 dS m-1 (green chili) and 2.0 dS/m (capsicum) in the 0-15 cm layer, and 2.0 dS/m (green chili) and 1.42 dS/m (capsicum) in the 15-30 cm layer. Remarkably, even with irrigation water salinity up to 4 dS/m, yield losses remained below 10% under drip-irrigated polyhouse conditions. This enhanced tolerance is attributed to drip irrigation's localized wetting patterns, which partially leach salts away from the active root zone. These findings highlight that drip irrigation in protected environments mitigates salinity, allowing safe use of moderately saline water for these crops. The long term soil salt accumulation risk due to prolonged saline water irrigation require further research.