The government allows you to deduct either your sales tax or your state and local income tax. The deduction for state and local taxes is generally limited to $10,000 ($5,000 if married filing separately).
Your state and local sales tax amount is generally an amount of sales tax you were estimated to have paid throughout the year using an IRS formula. If you made large purchases throughout the year, such as new car, a new mobile home or a home remodel, you may benefit by entering sales tax actually paid.
Your state income tax, on the other hand, includes:
- State and local income taxes withheld from your salary during 2023. Your Form(s) W-2 will show these amounts. Forms W-2G, 1099-G, 1099-R, 1099-MISC, and 1099-NEC may also show state and local income taxes withheld; however, don't include on line 5a any withheld taxes you deducted on other forms, such as Schedule C, E or F.
- State and local income taxes paid in 2023 for a prior year, such as taxes paid with your 2022 state or local income tax return. Don't include penalties or interest.
- State and local estimated tax payments made during 2023, including any part of a prior year refund that you chose to have credited to your 2023 state or local income taxes.
- Mandatory contributions you made to the California, New Jersey, or New York Nonoccupational Disability Benefit Fund, Rhode Island Temporary Disability Benefit Fund, or Washington State Supplemental Workmen's Compensation Fund.
- Mandatory contributions to the Alaska, California, New Jersey, or Pennsylvania state unemployment fund.
- Mandatory contributions to state family leave programs, such as the New Jersey Family Leave Insurance (FLI) program and the California Paid Family Leave program.
For more information, please see Schedule A instructions.