Fiscal Tax Blog

The American Jobs Creation Act of 2004 and subsequent legislation allowed individuals to deduct state and local general sales taxes in lieu of state and local income taxes.  This deduction was set to expire at the end of 2007. New tax legislation passed by Congress last year makes the deduction retroactive for 2008 and extends it for another two years through December 31, 2009.

Tax Tip: Taxpayers can calculate their deduction either by saving receipts or using the Optional State Sales Tax Tables provided by the IRS.

Tax Tip: The state and local sales tax deduction benefits taxpayers that live in states like Florida that don’t have an income tax.  If you live in a state like Indiana that has an income tax, you’ll probably see greater tax savings by deducting your state and local income tax instead.

Can't take advantage of this tax break?

Check out our list of 40 Tax Breaks that you could use to get your largest tax refund ever in 2009.

Have a question about this tax break?

Leave a comment below and we'll get you an answer that could save you money on your tax return this year.