This may be the last year that taxpayers who itemize get to choose between deducting their state income taxes or their state sales taxes on their federal tax return. Unless Congress acts, the either-or-state-tax break will expire at the end of the year. In the meantime, if you plan to deduct your sales taxes, buying a big ticket item like a car or a boat before the end of the year can substantially boost your deduction.
For most taxpayers, the state income tax provides a larger deduction. But for residents of states that don't have an income tax, such as Texas or Florida, the sales tax deduction is an easy choice.
You can save your receipts or use the IRS's state-specific tables to estimate your sales tax based on your family's size and income. In either case, you can add the sales tax for major purchases like a car or boat to boost your tally.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Just think, if you buy an energy-efficient hybrid car before the end of the year, you'll qualify a sales tax deduction and an energy tax credit of up to $3,000, depending on the make and model. But shop carefully. The tax credit for the most popular Toyota hybrids has already been exhausted.
Return to: 15 Year-End Tax Moves
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
Embracing Generative AI for Financial SuccessGenerative AI has the potential to reshape how we approach learning about and managing our personal finances.
-
What Is a Qualified Charitable Distribution (QCD)?
Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
New Law Delivers Tax Breaks to Natural Disaster Victims, But Is It Enough?Tax Relief The legislation provides critical tax relief to thousands of natural disaster victims across the country.
-
On the Naughty List: Holiday Tax Scams to Look Out ForTax Tips The IRS says scammers are on the prowl for your financial information. Know the signs so you don't fall victim.
-
Retirement Abroad? Three Countries Without Inheritance TaxRetirement Taxes These 2025 top-retiree-friendly countries have an added benefit: potential tax savings for you and your heirs.
-
Five Tax-Savvy Ways To Donate This Holiday SeasonCharitable Donations Food pantries, toy drives, and animal sanctuaries are popular ways to support others year-round.
-
Tax Pros: Is Someone Fraudulently Filing Returns With Your PTIN?Tax Filing An unmonitored preparer tax identification number (PTIN) can lead to serious issues.
-
Can Tariffs Make Childcare More Affordable?Tariffs President-elect Trump suggested tariffs can address the childcare crisis, but economists are doubtful.
-
Are You a Renter? You Could Save on TaxesTax Breaks With these tax savings at your fingertips, rent may be more affordable
