Can I deduct state sales tax on my federal return?


Can I deduct state sales tax on my federal return?

The Internal Revenue Service (IRS) permits you to write off either your state and local income tax or sales taxes when itemizing your deductions. You can use either the actual sales taxes you paid or the IRS optional sales tax tables.

Can you write off sales tax as an expense?

Yes. If you’re allowed to deduct certain expenses, you can deduct the full cost of the expense including sales tax. However, you might have deducted local and state sales tax — instead of state and local income taxes — on Schedule A.

How much sales tax can you write off?

The latest changes, signed into law in late 2017 via the Tax Cuts and Jobs Act, limit the deduction to no more than $10,000, regardless of whether the taxpayer claims state income or state sales tax.

How do you calculate sales tax deduction?

Think about using the IRS’s official estimator. There are two ways to calculate your sales tax deduction: Pull your hair out trying to find receipts for everything you bought during the year, so you can add up the sales tax, or Just estimate what you paid by using the IRS’s sales tax tables,…

What is the state and local sales tax deduction?

The state and local tax deduction, commonly called the SALT deduction, is a federal deduction that allows you to deduct the amount you pay in taxes to your state or local governments.

Are state sales taxes deductible?

You can deduct state and local income taxes at tax time or sales taxes that you paid during the year, but you can’t claim both – you have to choose. The sales tax deduction works best for people who live in states with no income tax, or whose sales tax deduction is larger than their state income tax deduction would be.

Is all sales tax deductible?

The IRS allows you to deduct the actual sales taxes you paid, as long as the tax rate was no different than the general sales tax rate in your area. Exceptions are made for food, clothing and medical supplies. Actual sales taxes on these items are deductible even if consumers paid less than the general sales tax rate on these items.

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