If you itemize your deductions, the IRS may let you deduct certain state and local taxes you paid during the tax year. To qualify, the tax must have been assessed to you and paid during the year for which you are filing.
Keep in mind that state and local tax deductions may be subject to IRS limits, so it's important to enter your information accurately when preparing your return.
Taxes You Can Claim
You may be able to deduct the following taxes:
- Additional state and local income taxes paid during the tax year
- State and local sales tax or state and local income tax withholding (you can't claim both)
- Real estate taxes paid on your personal home or homes
- Personal property taxes, such as the value-based portion of a vehicle registration fee, when the tax is based on the vehicle's value
Taxes You Cannot Claim
The following taxes and fees aren't deductible as itemized deductions:
- Federal income taxes paid for the current year or any prior year
- Real estate taxes on rental property that have already been claimed as a rental expense elsewhere on your return
- Personal property taxes based on a vehicle's weight rather than its value
- License plate fees or registration fees that are not based on the vehicle's value
- Back taxes, tax penalties, or tax refunds that were offset to pay other tax debts
A Quick Tip Regarding Vehicle Registration
When entering vehicle registration information, review your registration statement carefully. Many states combine several charges into one fee, but only the portion that is based on the vehicle's value may qualify as a deductible personal property tax.
What to Do Next
Gather any tax bills, vehicle registration statements, and records of state or local tax payments before entering your itemized deductions. Having these documents handy can help you claim every deduction you're entitled to and avoid reporting amounts that don't qualify.