• You have the option of taking a sales tax deduction or the state and local taxes paid for the year on your IRS return. Obviously you have to take the larger of the two. The drawback on taking the sales tax deduction is being able to have the receipts to back up your claim. Usually the state and local tax paid is larger. The only time the sales tax is claimed is like in your case, you paid a lot of sales tax. You could also add the sales tax on a large purchase like a car, a boat, a plane, etc. The IRS has a sales tax table for deduction based on gross income which can be added to sales tax on large purchases like your house sales tax on materials. One thing to remember, deduction is either or and not both.

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