Sales Tax Deduction: What It Is and How to Claim It

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The sales tax deduction lets you deduct the state and local sales taxes you’ve paid throughout the year, but only if you itemize your deductions. If you live in a state with no income tax or have made a large purchase like a car or home renovation, this deduction could save you some serious cash.

Find out how to claim your sales tax deduction and save on your 2025 taxes.

What Is the Sales Tax Deduction?

The sales tax deduction allows you to subtract state and local sales taxes from your taxable income. You can only claim it if you itemize your deductions instead of taking the standard deduction.

If you choose to deduct sales tax, you can’t deduct state and local income tax in the same year.

Sales Tax Deduction Cap

Thanks to the Tax Cuts and Jobs Act, there’s a cap on how much sales tax you can deduct. From 2018 to 2025, the cap is $10,000 for single filers and married couples filing jointly. If you’re married and filing separately, the cap drops to $5,000 each.

Who Should Claim the Sales Tax Deduction?

When should you choose the sales tax deduction over the income tax deduction? It depends on your situation, but here are some scenarios where the sales tax deduction is a better option:

1. Living in a State With No or Low Income Tax

If you live in a state like Florida, Texas or Washington, where there’s no state income tax, the sales tax deduction is probably your best bet. Without an income tax to deduct, your sales tax will likely be higher and more beneficial to claim.

Did you know? Seven states don’t have an income tax, making the sales tax deduction the only option for those residents.

2. Making Large Purchases

Made a big purchase this year, like a new car, boat or home improvement materials? You could be looking at significant sales tax, making the sales tax deduction even more valuable.

High-ticket items like these can result in a higher tax deduction than your state income tax.

3. States Without a Sales Tax Deduction

Some states don’t offer a sales tax deduction, including Alaska, Delaware, Montana, New Hampshire and Oregon. If you live in one of these states, it’s better to claim your state income tax instead.

What Purchases Qualify for a Sales Tax Deduction?

Here is a chart to help: 

How to Claim the Sales Tax Deduction

You can claim the sales tax deduction in two ways: using the IRS Sales Tax Deduction Calculator or by itemizing your deductions on Schedule A (Form 1040).

Use the IRS Sales Tax Deduction Calculator

If you’re looking for an easy option, use the IRS Sales Tax Deduction Calculator. This tool estimates your total deduction based on your income, family size and state of residence.

If you made a large purchase (like a car or home renovation materials), you can enter that into the calculator to adjust the deduction.

Itemize Your Deductions on Schedule A

For those who want to take a more hands-on approach, you can itemize your deductions on Schedule A:

• Step 1: Under “Taxes Paid” on Schedule A, choose state/local sales tax.
• Step 2: Enter the sales tax amount based on the IRS sales tax tables. If you made major purchases, don’t forget to add those taxes.
• Step 3: Submit Schedule A with Form 1040.

How to Use the IRS Sales Tax Tables

If you choose not to add all your sales receipts together, you can use the IRS sales tax tables. These tax tables appear at the very end of Schedule A. The tables are based on the following information: 

• Your adjusted gross income (AGI)
• Family size 
• State of the residence 
• Local sales tax rate 

You may add the sales tax from major purchases (like a car or boat) on top of the estimated amount.

Sales Tax Deduction vs. Income Tax Deduction

You might be wondering: Should I claim sales tax or income tax on my return? Here’s a quick way to compare:

• Step 1: Use the IRS Sales Tax Deduction Calculator or the IRS sales tax tables in Schedule A.
• Step 2: Compare your sales tax estimate to your income tax payments. You can check your pay stubs or use an online calculator to find out how much income tax you’ve paid.

The deduction with the higher amount will benefit you the most.

Tips for Maximizing Your Sales Tax Deduction

To get the most out of your sales tax deduction, follow these tips:

• Track large purchases: Keep a record of purchases like cars, boats or home improvement materials that qualify for the deduction.
• Save receipts: Make sure your receipts are itemized and note the sales tax paid.
• Prepare early: Organize your receipts ahead of tax season. You can even use a receipt scanner or apps like QuickBooks to keep things neat and tidy.

Final Take: How to Prepare for the Sales Tax Deduction

The sales tax deduction can be a great way to save money on your taxes, especially if you’ve made large purchases or live in a state with no income tax.

Here are some key takeaways to prepare for a sale tax deduction: 

• Keep receipts for large purchases (like a car or home renovation materials).
• Choose between deducting sales tax or state income tax, depending on which is more beneficial.
• Use the IRS sales tax deduction calculator or tables to estimate your deduction.
• Itemize your deductions on Schedule A and submit with Form 1040.

Follow these steps and use the right tools to maximize your deduction in 2025. Ready to get started? Keep track of your receipts, use the IRS tools and file with confidence!

Information is accurate as of June 18, 2025.

Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.

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