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State and local sales tax deduction remains, but subject to a new limit

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If you itemize, you can deduct either state and local income taxes or state and local sales taxes. Deducting sales tax can be valuable if you reside in a state with no or low income tax or purchased a major item, such as a car. The deduction for state and local taxes (including income or sales tax, as well as property tax) had been on the tax reform chopping block. It survived, but, for 2018 through 2025, the Tax Cuts and Jobs Act imposes a new limit: Your total deduction for all state and local taxes combined can’t exceed $10,000. Contact us to learn more.