Do you take the deduction? Yes, if your State has no income tax. Maybe, in all other States. In States with income tax, you can deduct either the total State income tax you paid during the year, or the sales tax you paid. You cannot deduct both or part of one and part of another. The next issue is: How do I determine the sales tax paid without all my receipts? There is a schedule (Publication 600) put out by the IRS for each State that has a sales tax and this is based on your Adjusted Gross Income on Line 37 of your Form 1040. But, you may add a certain number of non-taxable items to your Adjusted Gross Income: tax exempt interest, Veterans' benefits, non-taxable combat pay, Worker's Compensation, non-taxable Social Security and Railroad Retirement Benefits, non-taxable IRA, Pension or Annuity distributions and any public assistance payments. The higher the amount of income, the bigger the deduction. You can also deduct local sales tax and state and local sales tax for specific items such as motor vehicles, aircraft, boats, homes and home-building materials. To calculate the local sales tax deduction, assume that your Adjusted Gross Income is $80,000. Your State tax is 5% and your local community tax is 2%. The total State sales tax deduction under the schedule is $902. Divide the local rate (.02) by the State rate (.05) and it comes to .4. Multiply .4 by $902 and you receive an additional sales tax deduction of $360.80. Remember that these deductions will be denied in determining the AMT tax so you have to determine if the larger deduction is best for you.