The 2004 American Jobs Creation Bill allows individual taxpayers who file itemized deductions (Schedule A) on their tax return the option to deduct their state and local sales tax or state income taxes on their 2004 tax return.
For those living in the states of Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming the choice is easy since they don't have state income taxes. Anyone living in the other 43 states, however, will have to take the time and figure out which of the two options is most beneficial in saving them money on their taxes.
For 2004, most taxpayers will likely opt for the sales tax tables provided by the government since they are unlikely to have the receipts to support a claim of how much they actually paid in sales tax. The IRS has created standard sales tax tables that will give you a specific dollar amount of sales tax that you can deduct for your state depending on your income and number of dependants. Here are the tables for each state provided by the IRS:
Alaska Sales Tax Deduction Table: There is no table for Alaska. If you live in Alaska and paid any local sales taxes, you must use your actual expenses to figure your sales tax deduction.