State and Local Taxes - Schedule A
When filing your federal tax return using Form 1040, you may choose to itemize deductions on Schedule A instead of taking the standard deduction. One of the key deductions available on Schedule A is for state and local taxes (SALT), which includes state and local income taxes, real estate taxes, and general sales taxes.
What Can Be Deducted?
- State and local income taxes paid in 2025, including estimated tax payments and taxes paid for prior years (e.g., 2024 state tax return).
- Real estate taxes on property you own and use as your home or rental property.
- State and local general sales taxes paid on specified items, which can be calculated using the worksheet or the Sales Tax Deduction Calculator.
- Taxes imposed by U.S. territories can be included with state and local taxes on lines 5a, 5b, or 5c, unless allocable to excluded income.
Important Limitations
- The total deduction for state and local taxes is limited to $10,000 ($5,000 if married filing separately). If your total SALT deduction is at or below this limit, you do not need to complete the SALT worksheet.
- Do not include federal income tax, social security, Medicare, or federal estate and gift taxes in your SALT deduction.
- If you lived in more than one state or locality during the year, you must complete a separate worksheet for each location if the local sales tax rates differ.
Calculating Sales Tax Deduction
- If your local general sales tax rate changed during the year, prorate the rates based on the number of days each rate was in effect.
- Use the State and Local General Sales Tax Deduction Worksheet or the IRS Sales Tax Deduction Calculator at /RS.gov/SalesTax to determine your deduction.
- For sales tax on specified items (e.g., building materials for home renovation), include these on line 7 of the worksheet.
Special Considerations
- If you are eligible for new deductions introduced in 2025 (such as no tax on tips, overtime, car loan interest, or enhanced senior deduction), claim them on Schedule 1-A, not Schedule A.
- Do not include penalties or interest on state and local taxes. Only include actual tax payments.
- For foreign taxes, consider claiming a credit instead of a deduction. See Schedule 3 (Form 1040), line 1, for details.
Source:
Schedule A (Form 1040) Instructions
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.