Sales Tax Deduction: Who Should Claim It and How Much You Can Write Off

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The sales tax deduction lets you deduct the state and local sales taxes you’ve paid during the year, but only if you itemize your deductions. If you live in a state with no income tax or made a large purchase like a car or major home improvement, this deduction could lower your tax bill.

Sales Tax Deduction: At a Glance

• You can deduct state and local sales taxes instead of state and local income taxes.
• You must itemize deductions on Schedule A (Form 1040).
• You cannot deduct both sales tax and income tax in the same year.
• The deduction is limited by the $40,000 state and local taxes (SALT) cap.
• Large purchases like cars, RVs or boats can increase the deduction.

What Is the Sales Tax Deduction?

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

You claim it on Schedule A (Form 1040) as part of the deduction for state and local taxes, commonly referred to as SALT.

If you choose to deduct sales tax, you cannot deduct state or local income tax in the same tax year. Taxpayers must choose whichever option results in the larger deduction for their situation.

Sales Tax Deduction vs. Income Tax Deduction

You can deduct either state and local sales taxes or state and local income taxes — not both.

The SALT Cap: Why It Limits This Deduction

Thanks to the Tax Cuts and Jobs Act (TCJA), the combined deduction for state and local taxes — including sales tax, income tax and property tax — was capped at $10,000. However, in 2025, the cap was increased to $40,000 due to the new Trump tax plan. 

From 2025 through 2029, these rules apply:

• Single or joint filers: $40,000 for incomes under $500,000
• Married filing separately: $40,000 each for incomes under $250,000
• Modified adjusted gross incomes (MAGI) above $500,000: The cap is gradually reduced by 30% until it reaches $10,000.
• Through 2029: The SALT cap and income thresholds will increase 1% per year.

The cap means even if you paid more than the cap in state and local taxes, you cannot deduct the excess.

Here’s an example:

• If you paid $20,000 in property tax and $22,000 in sales tax after purchasing a large item like an RV, your total state and local taxes would be $42,000.
• Because of the $40,000 SALT cap, only $40,000 would be deductible, and the remaining $2,000 could not be claimed.

Who Benefits Most From the Sales Tax Deduction

The sales tax deduction tends to benefit:

• Residents of states with no income tax, such as Texas or Florida
• Taxpayers who made large one-time purchases
• Retirees or others with lower taxable income but higher spending
• Renters who do not pay property tax but do pay sales tax

What Purchases Qualify for the Sales Tax Deduction

Here’s a breakdown of what purchases may qualify:

• Everyday retail items — food, clothing, medical supplies
• Cars — new or used
• Motorcycles, RVs
• SUVs, trucks, vans
• Off-road vehicles 
• Leased vehicles — sales tax portion only
• Large personal purchases — general sales tax only

What Doesn’t Qualify for the Sales Tax Deduction

The following items do not qualify for the sales tax deduction:

How To Calculate Your Sales Tax Deduction

You can calculate sales tax deductions using one of two methods.

Option 1: IRS Sales Tax Tables or Calculator

The Internal Revenue Service (IRS) sales tax tables estimate your deduction based on:

• Adjusted gross income
• Family size
• State of residence
• Local sales tax rates

You may add sales tax paid on major purchases, such as a car or boat, on top of the table amount.

Option 2: Actual Sales Tax Paid

You can calculate the sales tax you paid throughout the year using your receipts. This method often benefits taxpayers who made large purchases, but it requires more documentation.

How To Claim the Sales Tax Deduction: Step by Step

You can follow these steps to claim the deduction:

1. To claim the sales tax deduction, you must itemize your deductions and report the amount on Schedule A (Form 1040).
2. Choose to itemize deductions instead of taking the standard deduction.
3. On Schedule A, elect to deduct state and local general sales taxes instead of state and local income taxes by checking the appropriate box on line 5a.
4. Decide whether to calculate your deduction using the IRS optional sales tax tables or by totaling your actual qualifying sales tax paid during the year.
5. If you use actual expenses, add sales tax paid on qualifying large purchases, such as vehicles or other major personal items, to your total.
6. Report the final amount on Schedule A and file it with Form 1040.

Quick Examples

• A renter in Texas buys a $35,000 car and pays several thousand dollars in sales tax. With no state income tax to deduct, the sales tax deduction provides meaningful savings.
• A homeowner in California pays high income and property taxes. Because income tax withholding exceeds sales tax paid, deducting income tax is the better option.

Common Mistakes That Cost Taxpayers This Deduction

If you plan to claim this deduction, watch for these common pitfalls:

• Attempting to deduct both sales tax and income tax
• Forgetting to include major purchases
• Exceeding the SALT cap
• Claiming the deduction while taking the standard deduction
• Failing to keep documentation, such as receipts

Key Takeaways

• You can deduct sales tax or income tax, not both.
• You must itemize deductions to claim sales tax.
• Large purchases can significantly increase the deduction.
• The $40,000 SALT cap limits how much you can deduct, but is significantly more than the previous $10,000 SALT cap. 
• IRS tables simplify calculation for most taxpayers and a sales tax deduction calculator is also available. 

Rudri Patel contributed to the reporting for this article.

Information is accurate as of Jan. 14, 2026.

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