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Which deduction should I choose, state and local income tax or sales tax?

SOLVEDby TurboTax1536Updated January 06, 2022

For most people who itemize, the state and local income tax deduction gives them a bigger tax break. However, the sales tax deduction may be more advantageous for taxpayers who:

  • Are residents of Alaska, Florida, Nevada, South Dakota, Texas, Washington, or Wyoming
  • Made a major purchase and therefore paid a lot of sales tax
  • Made frequent or substantial purchases in a state with high sales taxes

We’ll figure this out for you in Deductions Credits and let you know which deduction saves you the most money based on your situation.

How this deduction changed starting in 2018

The SALT deduction (which is either state/local income tax plus property tax OR sales tax plus property tax) is capped at $5,000 for married couples filing separately and $10,000 for all other filers. In 2017 and earlier, there was no cap.

Here's an example that compares the changes:

2018 and later2017 and earlier
  • State and local tax (or sales tax) = $7,500
  • Property tax = $5,000
  • Vehicle registration = $500
  • Total SALT = $13,000

Deductible amount = $5,000 (married filing separately) or $10,000 (all others)

  • State and local tax (or sales tax) = $7,500
  • Property tax = $5,000
  • Vehicle registration = $500
  • Total SALT = $13,000

Deductible amount = $6,500 (married filing separately) or $13,000 (all others)

Taxpayers must still itemize to get this deduction — that part hasn't changed.

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