Income tax
Business Expensesfreelancerssmall business ownersconsultantsindependent contractorstax
Federal income taxes paid are not deductible on your federal tax return. However, state and local income taxes can be deducted as an itemized deduction on Schedule A of Form 1040. This deduction is subject to the SALT (State and Local Taxes) cap, which limits the total deduction for state and local taxes, including property taxes, to $10,000 ($5,000 if married filing separately). It's important to note that you must choose between deducting state and local income taxes or state and local sales taxes, but not both. For example, if you paid $8,000 in state income taxes and $3,000 in local property taxes, you can deduct $10,000 due to the SALT cap.