Al-Matalib al-'Aliyah 2656 — Greeting disbelievers with salam

It is narrated from Sayyiduna Abdullah bin Abbas (may Allah be pleased with them both) that he said: "Whoever of Allah's creation greets you with salam, return his greeting, even if he is a Magian (fire-worshipper), for Allah Almighty says: 'And when you are greeted with a greeting, greet in return with what is better than it, or return it' [Surah al-Nisa: 86], (the meaning of which is that) for the people of Islam you should reply with better words than those, or for the polytheist return the same words."
Imam Abu Ya'la recorded it, and all its narrators are thiqat (trustworthy).