You should never over-fill your salt tank
But how much is enough? Well, the answer will be different for different homes, but here's a general idea. Factoring in a few variables will make this easier to explain.
The bigger the family, the more salt you will use.
Also, the harder your water, the more salt you will use. So, if you are a family of six, with a water hardness of 30 grains per gallon, your salt consumption will be double that of a family of 3 or a family of six with 15 grains of hardness. That's not exact, but close enough.
One bag at a time is good for everyone if you can remember to keep your eye on the level
In a perfect world, you would never use more than one bag of salt at a time. This isn't practical for most families. So let's compromise and say don't fill it to the top or even three-quarters full, let's shoot for two bags at a time and leave it at that.
Too much salt in the tank compacts the salt in the bottom and it won't dissolve
When this happens, it appears that everything is working but the water is still hard. The softener meters regenerates, goes through all the motions, but because it hasn't dissolved enough salt, the resin remains uncharged and cannot collect the calcium from your water.
More salt does not mean softer water
Adding more salt to your softener does not make the water softer. In fact, the salt will dissolve to a saturation point regardless of how much salt is in the tank. On the other hand, adding more water to your salt tank will in fact dissolve more salt, but once again, it probably won't make your water any softer. The exception to this would be if at some point you have actually run out of salt and left the softener for some time without refilling the brine tank. At that point, adding extra water will dissolve more salt and allow the softener to completely recharge the depleted resin. Or, you can do two regeneration cycles in a row.
What kind of salt should you buy?
Buy the salt that is on sale. It all works the same way as long as you don't over-fill the tank. Pellets are a little softer and will stick together, rock is usually nice and firm and allows for lots of contact, solar often has some dirt in it. But every batch can be different, so even if you buy the same brand it might vary from bag to bag. Don't fuss too much over the salt, just remember the golden rule. Two bags at a time, max!