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Deduction for State and Local Income Taxes

You can deduct a variety of state and local income taxes that you paid during the tax year. These include:

  • State and local income taxes withheld from your salary during the tax year. Tax forms like your W-2s and your 1099s will show these amounts.
  • State and local income taxes paid during the current tax year for a prior year. For example, if you filed your state return last year and you owed an amount to the state, you would have had to make a payment or payments for the amount due. The amount paid in for this purpose during the tax year is eligible to be deducted.
  • State and local estimated tax payments made during the tax year, including any prior refund that was credited to last year's state or local income taxes. For example, on your state return that you filed last year you may have been due a refund. If so, you could have chosen to have part of that state refund applied to this tax year's state taxes. If you elected to do this, the amount applied to this year's state taxes would qualify for a deduction on your federal return.
  • Mandatory contributions you made to the California, New Jersey, or New York Non occupational Disability Benefit Fund, Rhode Island Temporary Disability Benefit Fund, or Washington State Supplemental Workmen's Compensation Fund. These can generally be found in Box 14 of your Form W-2.

DO NOT INCLUDE: Any part of a state or local income tax refund or credit you received from last year's state or local return(s) OR that you expect to receive from this year's state or local return(s).

TaxSlayer Entry: If you did pay any qualifying state or local income taxes during the tax year, you can enter these within the federal return under: Deductions >> Enter Myself >> Itemized Deductions >> Taxes You Paid.