My Sales Tax Deduction for 2024 calulated by TurboTax is ~20% lower than was calcualted in 2023? Why?

[twoglesby]

Since the Tax Rate is the same for both years, what else is responsible for the 20% reduction in the deduction year to year?

[DoninGA]

Was your Adjusted Gross Income on the 2024 tax return less then the AGI on the 2023 tax return?  If so, that would account for the decrease.

[twoglesby]

In response to your suggestion, My AGI for 2024 is about 25% higher than my AGI in 2023

[DoninGA]

That would really be unusual if your income in 2024 is greater than your income in 2023 and the sales tax is less in 2024.  So there is something else going on.

Go to this IRS website for sales taxes and see it it come close to the TurboTax sales tax for 2024 - https://www.irs.gov/credits-deductions/individuals/use-the-sales-tax-deduction-calculator

[twoglesby]

Thanks, I'll take a look on the site you provided the link for. Tom

[twoglesby]

Thanks for the tip. The IRS calculated the same Sales Tax deduction as TurboTax. Still don't know why it is lower this year with a much higher AGI in 2024 than in 2023 but since the IRS and Turbo Tax calculate the same deduction, I can live with the result. Appreciate your help. Tom 

[robonli]

I have the exact same issue.  TurboTax does match what the IRS calculator shows which is somewhat comforting.

My AGI is up over 20% from 2023 yet my sales tax deduction is down about 22% from 2023.  The tax rate has not changed in my area between the two years.

So I'm guessing this is some IRS change again?

[twoglesby]

The reason for the Sales Tax Deduction was because it is included in the $10,000 limit for deductions for State Taxes on Federal Tax Returns. 

Hopefully, Congress will raise the State Tax deduction limit when they consider the tax rules for 2026.

Tom

[BadKitty]

IRS reduced the amounts from 2023 to 2024. I can't find any explanation on why the IRS sales tax amount decreased in 2024 or the IRS methodology for setting these amounts from year to year. It looks to be across all states, income levels and family size, but I haven't gone through and checked each one. Look up Instructions for Schedule A for 2023 and 2024 and search for Optional State Sales Tax Tables and you can see the year over year change for your state based on income and family size. These are the tables the IRS Sales Tax Calculator uses (and TurboTax). I'm in the same boat as you -- AGI went up but my sales tax deduction went down.  

[KrisD15]

The sales tax is based on the state tax rate and your income. 

The higher your income, the higher the sales tax deduction. 

I assume the IRS decided that the more you earn, the more you buy and the more you buy, the higher the sales tax that you pay. 

[txalicia]

That is not what the post is about.  My AGI went up as well from 2023 to 2024, but my Sales Tax Deduction went down.  If the rationale is that if I made more then I spend more, my Sales Tax Deduction should be higher in 2024.  However, it's lower in 2024 than 2023.  My state is TX, have no state/local income tax, and am just taking the straight standard sales tax deduction.  

I am shocked that no Turbo Tax experts on this community can explain why this is...

[MarilynG1]

The Sales Tax calculation is based on income and family size.  If income went up (or dependents changed), your sales tax deduction may have gone down.  If you're working, usually your income tax is higher than the sales tax deduction, so that is used instead. Perhaps Texas lowered their sales tax %?

Here's detailed info on the Sales Tax Deduction. 

@txalicia