The IRS is offering all sorts of helpful tax tools now, and one of those is a calculator that can help you figure out a tax deduction for state sales tax paid throughout the year. This is one of those items on your taxes that you may not know much about. However, if you are using the 1040 form and itemizing your deductions on Schedule A, you can take a tax deduction for state sales tax paid over the year.
It is important to note, though, that if you take the deduction for the state sales tax, you can’t take the deduction for state income tax paid. You can only choose one or the other. But some people find that they get more of a deduction for the sales tax, depending on what they bought throughout the year. While the IRS suggests keeping your receipts and adding up the sales tax, this is not strictly necessary. IRS.gov offers a sales tax deduction calculator that can help you figure your tax deduction for state sales tax.
If you want to set up to take the sales tax deduction for next year, you can keep track of your sales tax payments starting now. I actually have a separate category for sales tax in my personal finance software. This makes it much easier to add up at the end of the year–since my computer does it for me!