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Deducting State and Local Taxes for 2021 and 2022

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With Tax Season 2022 about to kick into full swing, we look to tax expert Mike Pusey, CPA for some need-to-know facts and rules associated with deducting state and local taxes.

Jan 13th 2022
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For this tax filing season, the limitations on deducting state and local taxes result in many more taxpayers using the standard deduction.

The standard deduction is as follows in 2021 and 2022:

Filing Status Standard Deduction 2021 Standard Deduction 2022
Single; Married Filed Seperately $12,550 $12,950
Married Filing Jointly & Surviving Spouses $25,100 $25,900
Head of Household $18,800 $19,400

 

 

 

 

 

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For 2018-2025, the general rule says the sum of the following are deductible as itemized deductions but limited to $10,000 ($5,000 if married filing separately):

  • state and local income taxes (or state sales tax)
  • state and local real estate taxes (but not foreign real property taxes)
  • state and local personal property taxes (but not foreign personal property tax) (See Sec. 164(b)(6))

The above are summed on the “Taxes You Paid” portion of Form 1040’s Schedule A, line 5. The emphasis is on amounts paid. The state income tax would be as reduced by state credits. 

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