What Taxes Are Deductible?

You can deduct, on Schedule A as an itemized deduction, certain taxes that were imposed on you that you paid during the year. You cannot deduct taxes paid for another party, if you are not also liable for payment of the tax. You can deduct property taxes paid on any number of homes you own. For 2023, the total of all state and local taxes deducted, including property taxes, is limited to $10,000 per tax return ($5,000 for married filing separately).

Deductible taxes include:

  • State and local income tax or sales tax, but not both. If your state and local taxes are more than the sales tax, we'll use the state and local taxes as a deduction.
  • Payments to certain state benefit funds (including California state disability insurance) that are imposed as taxes.
  • Foreign income taxes (unless you elect to claim the credit on Form 1116).
  • Real estate taxes on property you own (but not just amounts impounded by the mortgage company, until the taxes are actually remitted to the taxing authority).
  • Your share of real estate taxes on a co-op apartment.
  • Personal property taxes.

You CANNOT deduct:

  • Federal income taxes.
  • FICA tax withheld.
  • Charges imposed by taxing districts for improvements or services, such as garbage collection or sewers.
  • Federal and state excise taxes.
  • Fees for drivers licenses, dog licenses, hunting or fishing licenses.