Can I deduct state or local income tax on my federal return?
You might be able to get a federal deduction for state or local income taxes you paid in 2018, even if they were for an earlier tax year.
To get this deduction, you can't claim sales tax and you'll need to itemize. We estimate that this year, only about 10% of taxpayers will be itemizing (down from 30% last year) due to tax reform. Also, even if you do itemize, there's a new cap on the SALT deduction (state and local tax) which may limit the amount you can deduct. More info
Nevertheless, you should enter these payments and we'll figure out if they're deductible or not:
- With your tax return open, search inside your program for taxes paid.
- Select the "Jump to" link at the top of your search results. This takes you to the Estimates and Other Income Taxes Paid screen.
- On this screen, select Start or Update next to the appropriate topic under the heading which applies to your situation:
- Estimated Tax Payments to enter 2017 or 2018 state/local estimated payments;
- Payments With Extension to enter 2017 or 2018 state/local payments you made with your state or local extension;
- 2017 Refund Applied to 2018 if you applied any portion of last year's state/local refund to this year's state or local return;
- Other Income Taxes Paid in 2018 if you paid 2017 or earlier state/local taxes.