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Deductions

Deductible Taxes

If you itemize deductions, you may be able to deduct your state, local and foreign income taxes, and state and local personal property taxes. You may also choose to deduct state and local sales taxes instead of state and local income taxes.

Deductible Personal Property Taxes

Personal property taxes are deductible if the tax is imposed on a yearly basis and is based on the assessed value of the property. Taxes not based on the value of the property are not deductible.

Deductible Income Taxes

State and local income taxes withheld from your wages during the year are deductible in the year they were withheld. State and local income tax estimates or prior year payments are also deductible in the year you paid them.

Foreign income taxes usually qualify as an itemized deduction or as a tax credit in the year you paid them.

Deductible Sales Tax

You have the option of deducting state and local income taxes or state and local sales tax. You cannot deduct both.

To claim the sales tax deduction you can either add up all sales tax paid for the year (if you have the receipts) or you can claim a standard amount based on your state and income level. The IRS has provided an easy-to-use calculator to help you figure the standard amount of deduction you are eligible to claim.

Non-Deductible Taxes

  • Federal income tax
  • Social Security tax
  • Stamps
  • Transfer of property tax
  • Estate and inheritance tax
  • Water, sewer or trash collection
  • Vehicle licensing fees based on vehicle weight

For more information please refer to IRS Tax Topic 503 - Deductible Taxes.