An Overview of Deductible Taxes

There are certain types of taxes that you can deduct on your tax return if you itemize on Form 1040, Schedule A. To be deductible on your tax return, a tax must be charged to you and you must have paid it during your tax year. Here are the six taxes the IRS will allow you to deduct if you itemize:

1. State and local income tax. Individuals can deduct state and local (city) income taxes on their Federal tax return. These taxes usually are withheld from your wages during the tax year and appear on your Form W-2. Also, any estimated state and local tax payments during the tax year are tax-deductible. To increase your itemized deductions on your tax return, consider prepaying estimated state income taxes before the end of the year. Lastly, if you owed any tax on last year’s state and local tax, return those tax payments are deductible in the current tax year.