Sales Tax Deduction Explained

How the Sales Tax Deduction Works

The state and local general sales tax deduction lets itemizers deduct the sales tax they paid during the year on Schedule A. It is an either/or choice: on the same return you can deduct either your state and local income tax or your state and local sales tax — not both. People in states with an income tax usually come out ahead deducting income tax, while residents of states with no income tax typically choose sales tax.

You can deduct your actual sales tax from saved receipts, or use the IRS optional sales tax tables, which estimate your sales tax from your income, family size, and local tax rate — no receipts needed. Either way, you can add the sales tax on a few specified large purchases (like a vehicle or boat) on top of the table amount.

The sales tax calculator above estimates tax on one purchase using a statewide average combined rate. It does not estimate your annual deductible sales tax. To choose between sales tax and income tax, compare your actual sales tax from receipts or the IRS optional-table amount with the state and local income tax you actually paid. Property tax counts toward the same SALT limit; the property tax calculator can provide a planning estimate.

The 2025–2026 SALT Cap

The sales tax deduction is part of your combined deduction for state and local taxes (SALT) — income or sales tax, plus property tax. The limit is $40,000 for 2025 and $40,400 for 2026; married filing separately limits are $20,000 and $20,200. The phase-down starts above modified AGI of $500,000 for 2025 and $505,000 for 2026 (half those thresholds if married filing separately). The limit cannot fall below $10,000, or $5,000 if married filing separately, and returns to $10,000 in 2030 under current law. Property tax counts against the same limit, so use the property tax calculator only as a planning estimate.

Who Should Deduct Sales Tax?

Deducting sales tax instead of income tax often benefits residents of the nine states with no broad individual income tax — Florida, Texas, Washington, Nevada, Tennessee, South Dakota, Wyoming, Alaska, and New Hampshire — because they have little or no state income tax to deduct. A specified large purchase can also increase the sales-tax amount. Compare the sales tax supported by your receipts or IRS optional-table calculation with the state and local income tax actually paid, then use the larger eligible amount. The salary calculator and sales tax calculator are planning tools, not substitutes for those tax records.