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Are state income payments deductible on federal taxes?


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2015-04-10 12:40:25
2015-04-10 12:40:25

Yes, State Income Taxes are deductible against Federal income; not the amount you owe the state, but the amount you actually paid through withholding, prior year credits, payments with the prior year state return, and/or estimated payments, during the calendar year for which you are filing Form 1040.

You must file a 1040 Schedule A, Itemized Deductions in order to claim either state income tax or state salestax on your return. Your total itemized deductions need to be greater than your Standard Deduction to be of benefit to you.

If you file a Form 1040, and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes. (You can't claim both.) If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount.

If you didn't save all your receipts, you can still choose to claim state and local sales taxes. You can even use the Sales Tax Deduction Calculator to figure how much state sales taxes you can claim if you decide to go that route.

Using the Sales Tax Deduction Calculator

To figure the amount of optional general sales tax you are eligible to claim, just answer a few online questions and the system does the rest.

First select the year you are filing taxes for. Then, using your ZIP Code and just a few entries from your draft Form 1040, the Sales Tax Deduction Calculator will automatically figure the amount of state and local sales tax you can claim. You will see the results from your entries immediately on your computer screen. Even if state and local sales tax rates changed during the year (e.g., due to changes in state and local rates or because you moved your personal residence), the Sales Tax Deduction Calculator can handle it.

Your entries are anonymous and the information is collected solely to allow you to determine your total allowable deduction. All entries are erased when you exit or start over.

Related Questions

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State income tax payments are deductible on your federal income tax return. (You may deduct state income tax or sales tax, but not both.) Federal income tax payments are deductible on your state tax return in a tiny number of states.

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Yes. State income (and net worth based) taxes are deductible from taxable income for Federal income tax purposes.

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State income taxes are deductible from Federal taxable income in the year they are paid, regardless of when they were due.

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Federal taxes paid or payable, (even if paid in the current year), aren't deductible in calculating your federal taxable income. State income tax payments may be deductible in determining your federal tax taxable income. And refunds received of a prior years State income tax may therefore be included in the current years federal taxable income.

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State income taxes are deductible on the Federal Form 1120. Other deductions include repairs, interest, and depreciation for homeowners filing Form 1120.


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