What taxes are deductible on a federal income tax return?
There are several kinds of taxes that are deductible, but not all deductions are available for all taxpayers Most tax deductions are available only on Form 1040. Form 1040A has limited deductions available and no deductions are available on Form 1040EZ.
Self -employment taxes are deductible for everyone who is self employed. They are an above-the-line deduction that reduces AGI (Adjusted Gross Income). Above the line deductions appear on the front page of Form 1040 and may be deducted whether you are able to itemize deductions or not. They are also deductions in addition to standard deductions, which make them more valuable.
State and local income taxes (or if you elect instead, sales tax), real estate taxes and personal property taxes are deductible if you are able to itemize, on Schedule A. (Property taxes held in an escrow account are not deductible until actually paid by the escrow company to the taxing authority.) Or, if it works better for your tax situation, you have the option to deduct sales tax in lieu of state and local income taxes. The main reason for this option is to allow fair treatment for taxpayers located in states that do not have state income tax.
Post-2017 law limitation: This state and local tax deduction was unlimited but the Tax Cuts and Jobs Act in 2017 changed all that starting 2018 through 2025. On personal income tax returns filed in 2019, the deduction cannot exceed $10,000 for all state and local sales, income and property taxes together. (The limit for married filing separately is $5,000.) This limitation does not apply for state, foreign or local property taxes and sales taxes that are deductible by filers of Schedule C, Schedule E, or Schedule F.
Foreign income taxes can be deductible but there is also a credit available for foreign income taxes and that normally produces a better result than a deduction. That is something that should be discussed with your tax consultant.
For more information on deductibility of taxes, see IRS Publication 17.