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 at all, because they use the standard deduction — a flat amount the IRS lets you subtract from your income without listing individual expenses. The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly. If your standard deduction is larger than the total of all your itemized deductions combined, you gain nothing by tracking sales tax.
If your itemized deductions do exceed the standard deduction, you can deduct sales tax you paid during the year — but only on certain items. You cannot deduct sales tax on groceries, gas, or most everyday purchases. You can deduct it on items you would already deduct if you bought them without sales tax: a home, a car, or materials for a home improvement that qualifies for deduction.
Key Takeaways
- You must itemize deductions on Schedule A to deduct any sales tax; most taxpayers use the standard deduction instead and cannot deduct sales tax at all.
- Sales tax is deductible only on purchases that would themselves be deductible — primarily real estate, vehicles, and may have access to home improvements.
- You can deduct either sales tax paid or state income tax paid in a single year, but not both; most people choose whichever is larger.
- You need receipts or a record of what you paid; the IRS provides a sales tax table as a backup if you do not have exact figures.
When itemizing makes sense
Itemizing is worth doing only if your total deductible expenses — sales tax, property tax, mortgage interest, charitable donations, and medical expenses above a threshold — add up to more than the standard deduction. For most households, they do not. A single person would need itemized deductions totaling more than $14,600 to benefit; a married couple would need more than $29,200.
If you own a home with a mortgage, you may already be close to that threshold because mortgage interest and property tax are both deductible. Adding sales tax on a home purchase or major renovation could push you over the line. If you do not own a home and have no large medical expenses or charitable giving, itemizing is unlikely to help you.
What sales tax purchases actually may have access to
Sales tax on a home purchase is deductible as part of the home's cost basis — the total amount you paid to acquire it. This includes the sales tax you paid at closing. Similarly, if you buy a vehicle and pay sales tax, that tax is part of the vehicle's deductible cost.
For home improvements, the rule is narrower. You can deduct sales tax only on improvements that add value to your home or prolong its life — a new roof, a furnace, an addition, or major repairs. You cannot deduct sales tax on routine maintenance like painting or cleaning, or on improvements that are purely personal (like a swimming pool, in most cases).
You cannot deduct sales tax on groceries, clothing, utilities, insurance, or personal services. You also cannot deduct sales tax on a car you use for personal driving, even though the car itself may be deductible under other rules (like the standard mileage deduction for business use).
Sales tax versus state income tax
The IRS lets you deduct either the sales tax you paid or the state income tax you paid in a given year — but not both. This is called the SALT deduction, and it is capped at $10,000 per year for all state and local taxes combined (including property tax).
If you live in a state with no income tax, like Texas or Florida, you would deduct sales tax. If you live in a state with high income tax, like California or New York, you would usually deduct income tax instead, because it is likely to be larger. You calculate both and choose the bigger number.
How to track and report sales tax
Keep receipts for any major purchases where you paid sales tax and plan to itemize. For a home or vehicle, the closing documents or bill of sale will show the sales tax amount. For home improvements, save the contractor invoices and receipts showing what you paid and what sales tax was added.
If you do not have exact receipts, the IRS publishes a sales tax table based on your state and income level. You can use this table to estimate your deductible sales tax for the year, rather than tracking every purchase. Many tax software programs will calculate this for you.
When you file, you report itemized deductions on Schedule A, which attaches to your Form 1040. Line 5 of Schedule A is where you enter either your sales tax or your state income tax (not both). If you use the IRS table, you do not need to submit receipts with your return, but keep them for your records in case of an audit.
The $10,000 SALT cap and what it means
The total of all state and local taxes you deduct — sales tax, income tax, and property tax combined — cannot exceed $10,000 in a single year. This cap has been in place since 2018 and is set to remain through 2025 under current law.
For most households, this cap does not matter, because their total state and local taxes do not reach $10,000. But if you live in a high-tax state, own expensive property, or made a large home purchase in a single year, you may hit the cap. In that case, you deduct $10,000 and cannot deduct the remainder.
Frequently Asked Questions
Can I deduct sales tax if I take the standard deduction?
No. The standard deduction and itemized deductions are mutually exclusive. You choose one or the other. If you take the standard deduction, you cannot deduct sales tax, state income tax, or any other itemized expenses.
What if I bought a car for business use?
Sales tax on a business vehicle is part of the vehicle's cost basis and is deductible as a business expense, separate from the standard deduction or itemized deductions. You would report this on Schedule C (if self-employed) or claim it as a business deduction on your return. This is different from personal vehicle purchases.
Do I need receipts to deduct sales tax?
For large purchases like a home or vehicle, the closing or purchase documents will show the sales tax. For smaller items, you can use the IRS sales tax table instead of tracking individual receipts. However, keep your actual receipts for your records in case the IRS asks questions.
Can I deduct sales tax on online purchases?
Yes, if you paid sales tax on an online purchase and that purchase would be deductible (like materials for a home improvement), the sales tax is deductible. Many online retailers now collect sales tax, so check your receipt. If no sales tax was charged, there is nothing to deduct.
What happens if my state has no sales tax?
If you live in a state with no sales tax, you have no sales tax to deduct. You would deduct state income tax instead (if you itemize). States with no sales tax include Alaska, Delaware, Montana, New Hampshire, and Oregon.