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Tax Deductions on Taxes Paid

Most taxpayers don't know that even taxes they pay may be tax deductible. There are rules to follow to determine if the taxes paid are tax deductible.

Tests for eligibility for tax deduction of taxes paid

In order to deduct any taxes paid,

  • the tax must be imposed on the taxpayer

  • the tax must be paid during the tax year

When are taxes paid not deductible?

Taxpayers cannot deduct:

  • taxes they do not owe but pay for someone else

  • taxes they owe but someone else pays

  • taxes that were not paid in that tax year

Taxes paid that may be eligible for tax deductions

State and local income or general sales taxes

Real Estate tax

Personal property tax

Which taxes are nondeductible taxes?
  • federal taxes (income tax, social security or FICA, Medicare, railroad retirement tax, gift tax)

  • Hunting licenses and dog licenses

  • Water and sewer taxes

  • Taxes on alcoholic beverages, cigarettes, tobacco

  • State, local, and federal taxes on gasoline, diesel, other motor fuels used in nonbusiness vehicle

  • Utility taxes such as telephone, gas and electricity
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