question.jpgIn Federal Income Tax

Can I deduct sales tax?

For the 2005 and 2006 tax years only, unless Congress extends the applicable law, you can choose to deduct state and local general sales tax instead of deducting state and local income taxes. As with the income tax deduction, you can only do this if you are itemizing your deductions rather than taking the standard deduction.

To calculate your deductible sales tax, you can calculate the actual sales tax you paid over the course of the year from receipts and other records. Alternatively, you can review IRS publications to find sales tax tables which provide a default deductible amount based upon your salary.