Can You Deduct Sales Tax on Your Taxes?

It is possible to deduct state and local general sales taxes on your federal income tax return. This deduction can reduce taxable income and tax liability.

Eligibility and the State Tax Deduction Choice

Claiming a deduction for state and local general sales taxes requires that a taxpayer itemize deductions on Schedule A (Form 1040). This means a taxpayer cannot take the standard deduction and also claim the sales tax deduction. The decision to itemize typically depends on whether the total of all eligible itemized deductions, including sales tax, exceeds the applicable standard deduction amount for a given tax year. For example, for 2025, the standard deduction is $15,000 for single filers and married couples filing separately, $30,000 for married couples filing jointly, and $22,500 for heads of households.

A taxpayer faces a choice when itemizing deductions: they can deduct either state and local income taxes or state and local general sales taxes, but not both. This choice forms part of the overall state and local tax (SALT) deduction, which also includes real estate and personal property taxes. The total amount deductible for state and local taxes, including sales tax, is subject to an annual limit, which has been $10,000 ($5,000 if married filing separately) for tax years after 2017.

The choice between deducting income taxes or sales taxes often depends on a taxpayer’s individual circumstances. Those living in states without a state income tax, or those who made significant purchases that incurred a large amount of sales tax, may find deducting sales tax more advantageous. Conversely, individuals in states with high income tax rates generally find deducting state income taxes more beneficial.

Determining Your Sales Tax Deduction Amount

Once a taxpayer decides to deduct sales tax, two primary methods are available for calculating the deductible amount: the actual expenses method or the IRS sales tax tables method. The method that yields the larger deduction should be chosen.

The actual expenses method requires meticulous record-keeping. To use this approach, a taxpayer must save receipts showing all sales tax paid throughout the year. This includes sales tax paid on everyday purchases, as well as on larger items. Sales taxes on food, clothing, and medical supplies are deductible. This method can be particularly beneficial for taxpayers who made significant purchases, such as a motor vehicle, aircraft, boat, or materials for a substantial home addition or renovation, as these items often incur substantial sales tax.

Alternatively, taxpayers can use the IRS sales tax tables to estimate their deduction. These tables provide a standard sales tax amount based on factors like the taxpayer’s state of residence, adjusted gross income, and the number of exemptions claimed. The tables are found in the instructions for Schedule A or can be accessed through the IRS Sales Tax Deduction Calculator. Even when using the tables, taxpayers can still add the actual sales tax paid on certain large purchases, specifically motor vehicles, aircraft, boats, and home building materials for a new home or substantial addition or renovation, to the table amount. This combined approach allows taxpayers to benefit from a standardized amount while also accounting for significant sales tax on specific, large items.

Reporting Your Sales Tax Deduction

After determining the deductible sales tax amount, the next step involves reporting it on the federal tax return. The sales tax deduction is claimed on Schedule A (Form 1040). Specifically, the calculated sales tax amount is entered on line 5a, which is designated for state and local income taxes or general sales taxes.

When electing to deduct general sales taxes instead of income taxes, a taxpayer must check the appropriate box on line 5a of Schedule A to indicate this choice. The amount entered on this line must reflect only the chosen deduction. If sales tax is deducted, the portion of line 5a related to state and local income taxes should be zero. The total amount entered on line 5a, combined with any real estate taxes on line 5b and personal property taxes on line 5c, contributes to the overall state and local tax (SALT) deduction.