State and Local Taxes

Generally, you don't have to pay federal tax on the amount of state and local taxes you pay. There are a few exceptions to this rule and a rather strict definition of what, exactly, is a "tax" instead of a license, but the principle generally holds true.

Deductible taxes include:

• income or general sales taxes
• personal property taxes
• certain other taxes

We've already discussed real estate taxes, which are deducted on Schedule C for business property, on Schedule E for rent-producing property, and on Line 6 of Schedule A for personal residence property