Sales tax is deductible on your federal income tax return only if you itemize deductions instead of taking the standard deduction, and only for certain types of purchases.

Most people cannot deduct sales tax because they take the standard deduction — a flat amount the IRS lets you subtract from your income without listing individual expenses. For the 2024 tax year, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. If you itemize instead, you can deduct either sales tax or state income tax (not both) as part of your state and local taxes (SALT) deduction, but only up to $10,000 per year total.

The choice between itemizing and taking the standard deduction is a math problem: add up all your itemized deductions (mortgage interest, property taxes, state income tax or sales tax, and charitable donations). If that total exceeds your standard deduction, itemizing saves you money. For most households, it does not.

Key Takeaways

  • You can only deduct sales tax if you itemize deductions on Schedule A, and your total state and local taxes (including sales tax) cannot exceed $10,000 per year.
  • The IRS lets you deduct either sales tax or state income tax, not both, so you choose whichever is larger for your situation.
  • Most filers use the standard deduction instead of itemizing, which means they cannot deduct sales tax at all.
  • Sales tax on business purchases and vehicle purchases may be deductible differently — business sales tax goes on your business return, and vehicle sales tax can sometimes be added to the vehicle's cost basis instead.

How the $10,000 SALT cap works

The SALT deduction cap limits your combined deduction for state and local taxes to $10,000 per year, regardless of how much you actually paid. This means if you paid $8,000 in state income tax and $4,000 in sales tax, you can deduct only $10,000 total — not $12,000. You choose which taxes to count toward that $10,000 to maximize your deduction.

In high-tax states like California, New York, and New Jersey, many itemizers hit this cap with state income tax alone, leaving no room to deduct sales tax. In lower-tax states, you may have room to deduct some sales tax after accounting for income tax and property taxes.

The $10,000 cap applies to married couples filing jointly and to single filers equally. Married couples filing separately each get a $5,000 cap. This cap has been in place since 2018 and is set to expire after 2025 unless Congress extends it.

Itemizing versus the standard deduction

To deduct sales tax, you must file Schedule A and itemize your deductions. Schedule A is where you list individual expenses the IRS allows you to subtract: mortgage interest, property taxes, state income tax or sales tax, and charitable donations. You add these up and compare the total to your standard deduction.

If your itemized deductions total $16,000 and your standard deduction is $14,600, you itemize and save $1,400 in taxable income. If your itemized deductions total $12,000, you take the standard deduction instead because $14,600 is larger. The IRS does not let you do both.

For most households, the standard deduction is larger. The Tax Foundation estimates that fewer than 10 percent of filers itemize. If you do not own a home with a mortgage, do not live in a high-tax state, and do not make large charitable donations, you almost certainly use the standard deduction and cannot deduct sales tax.

Which purchases may have access to for the sales tax deduction

If you itemize, you can deduct sales tax on most personal purchases: groceries, clothing, household goods, vehicles, and so on. The IRS does not require you to track every receipt. Instead, you can use the IRS sales tax tables, which estimate how much sales tax a person in your state with your income level typically pays. You find your state and income on the table and use that number.

You can also track your actual sales tax and deduct that amount if it is higher than the table. This requires keeping receipts or using software to add up the sales tax you paid throughout the year. Most people find the table easier.

Sales tax on business purchases does not go on Schedule A. If you are self-employed, you deduct business sales tax on your business return (Schedule C) as part of your cost of goods sold or business expenses. The same applies to rental property: sales tax on repairs or improvements goes on your rental property return, not on Schedule A.

Sales tax on vehicle purchases

Vehicle sales tax creates a choice. You can deduct it as part of your SALT deduction on Schedule A if you itemize. Alternatively, you can add the sales tax to the vehicle's cost basis — the amount you use to calculate depreciation for tax purposes. This second option is useful if you use the vehicle for business or rent it out, because a higher cost basis means larger depreciation deductions over time.

You cannot do both: deduct the sales tax on Schedule A and also add it to the vehicle's basis. Choose whichever gives you the larger tax benefit. If you use the vehicle entirely for personal use and do not depreciate it, deducting the sales tax on Schedule A (if you itemize) is your only option.

Using the IRS sales tax tables versus tracking receipts

The IRS publishes optional sales tax tables each year based on state tax rates and income levels. You find your state, your filing status, and your adjusted gross income (AGI) on the table, and it tells you an estimated sales tax deduction. You do not need receipts to use the table.

You can also deduct your actual sales tax if you have receipts or records showing what you paid. This is useful if you made large purchases (a car, a boat, home furnishings) that pushed your sales tax higher than the table estimate. Keep your receipts or use tax software that tracks sales tax automatically.

You choose whichever method gives you the larger deduction. Most people use the table because it is simpler and the IRS designed it to be reasonable for typical households. If you made unusual purchases or live in a high-tax state, tracking actual sales tax may pay off.

State-specific sales tax rules

Sales tax rates vary by state and sometimes by county. Some states have no sales tax (Alaska, Delaware, Montana, New Hampshire, Oregon). If you live in a state with sales tax but also paid sales tax in another state (for example, you bought a car out of state), you can deduct the total sales tax you paid across all states, as long as you stay within the $10,000 SALT cap.

A few states let you deduct sales tax on your state return separately from income tax. This does not change your federal deduction — the $10,000 cap and the choice between sales tax and income tax still explore on your federal return. Check your state's rules to see whether it offers a separate sales tax deduction.

Frequently Asked Questions

Can I deduct sales tax if I take the standard deduction?

No. The sales tax deduction is only available if you itemize deductions on Schedule A. If you take the standard deduction, you cannot deduct sales tax. Most filers use the standard deduction because it is larger than their itemized deductions.

Do I have to choose between deducting sales tax and state income tax?

Yes. You can deduct either sales tax or state income tax on your federal return, but not both. You choose whichever is larger. Both count toward the $10,000 SALT cap, so if you deduct $10,000 in state income tax, you have no room left for sales tax.

What if I do not have receipts for all my purchases?

You can use the IRS sales tax tables, which estimate your sales tax based on your state and income. You do not need receipts for the table. If you want to deduct actual sales tax, keep receipts or use tax software that tracks it automatically.

Can I deduct sales tax on a business purchase?

Sales tax on business purchases goes on your business return (Schedule C for self-employed, or the appropriate business form), not on Schedule A. It is deducted as part of your cost of goods sold or business expenses, separate from the SALT deduction.

Does the $10,000 SALT cap include property taxes?

Yes. Property taxes, state income tax, and sales tax all count toward the same $10,000 annual limit. If you pay $7,000 in property tax and $5,000 in state income tax, you have already hit the cap and cannot deduct any sales tax.