January 11, 2012 States Vary Widely in Number of Taxpayers Deducting State or Local Sales Taxes Nick Kasprak Nick Kasprak Print this page Subscribe Support our work Download Tax Foundation Fiscal Fact No. 288: States Vary Widely in Number of Taxpayers Deducting State or Local Sales Taxes Texas Has Highest Percent of Taxpayers Choosing Sales Tax Deduction Fiscal Fact No. 288 Introduction Taxpayers who itemize deductions have the option of deducting state and local taxes from their income. In doing so, each individual taxpayer must decide to deduct either the income tax withheld from his or her wages, or the total sales tax he or she paid during the tax year. Individuals who choose to deduct sales taxes have the additional option of reporting the exact amount (if they saved all their receipts) or using an estimate from the IRS that depends on their state and their income level. The option to deduct sales tax, rather than income tax, is a temporary provision that must be extended each year. States vary widely in the percentage of taxpayers who use each deduction. In general, more taxpayers elect to deduct income taxes than sales taxes. However, as one might expect, states that have no (or low) income taxes tend to see most taxpayers deducting sales taxes instead. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming are all states in which over half of the taxpayers elect to deduct state and local sales taxes, rather than income taxes, on their federal return, and these are all states that have either a very limited income tax (in the case of Tennessee) or no income tax at all. (The small number of taxpayers who do deduct income taxes in these states likely owe them to a different state than the one listed as their home on their federal return.) Taxpayers in these states therefore have the most to lose should this option not be extended each year. The eight tables below summarize the latest data from the IRS, for tax year 2009. Table 1. Percentage of Tax Filers Claiming State/Local Tax Deduction Choosing Sales Tax State Percentage Rank Texas 90% 1 Florida 89% 2 Tennessee 87% 3 Nevada 86% 4 Wyoming 84% 5 South Dakota 83% 6 Washington 83% 7 Alaska 51% 8 Arizona 26% 9 Mississippi 23% 10 North Dakota 20% 11 Alabama 16% 12 New Mexico 15% 13 Idaho 15% 14 California 15% 15 Illinois 15% 16 Oklahoma 15% 17 Kansas 15% 18 Arkansas 15% 19 New Jersey 14% 20 Louisiana 14% 21 Michigan 13% 22 Hawaii 12% 23 Georgia 12% 24 South Carolina 11% 25 Colorado 11% 26 Nebraska 11% 27 North Carolina 10% 28 New York 10% 29 Missouri 10% 30 Utah 10% 31 Iowa 9% 32 Kentucky 9% 33 Pennsylvania 9% 34 Connecticut 8% 35 Maine 7% 36 Ohio 7% 37 Vermont 7% 38 Rhode Island 7% 39 Wisconsin 7% 40 Minnesota 7% 41 Virginia 6% 42 West Virginia 6% 43 Maryland 5% 44 District of Columbia 5% 44 Massachusetts 5% 45 Indiana 5% 46 New Hampshire 4% 47 Montana 1% 48 Delaware 1% 49 Oregon 1% 50 United States 23% Table 2. Sales Tax Deduction Amount as Percentage of Both Deductions State Percentage Rank Texas 76% 1 Tennessee 72% 2 Washington 72% 3 Nevada 59% 4 South Dakota 58% 5 Florida 55% 6 Alaska 50% 7 Wyoming 44% 8 Arizona 9% 9 Mississippi 7% 10 New Mexico 5% 11 Alabama 5% 12 Louisiana 5% 13 Illinois 5% 14 North Dakota 5% 15 Oklahoma 4% 16 Arkansas 4% 17 Idaho 3% 18 Kansas 3% 19 Michigan 3% 20 Colorado 3% 21 Utah 3% 22 Georgia 3% 23 Missouri 3% 24 California 2% 25 Nebraska 2% 26 South Carolina 2% 27 Hawaii 2% 28 Iowa 2% 29 North Carolina 2% 30 New Jersey 2% 31 Pennsylvania 2% 32 Ohio 2% 33 Kentucky 1% 34 New York 1% 35 Indiana 1% 36 Vermont 1% 37 Virginia 1% 38 Wisconsin 1% 39 Rhode Island 1% 40 Minnesota 1% 41 West Virginia 1% 42 Connecticut 1% 43 Maine 1% 44 New Hampshire 1% 45 Maryland 1% 46 District of Columbia 1% 46 Massachusetts 0% 47 Montana 0% 48 Delaware 0% 49 Oregon 0% 50 United States 6% Table 3. Percentage of Taxpayers Deducting State and/or Local Income Taxes, 2009 Stat Number of returns Returns Claiming Deduction % of total Rank Maryland 2,751,233 1,262,005 46% 1 Connecticut 1,711,715 677,005 40% 2 Massachusetts 3,171,888 1,193,487 38% 3 District of Columbia 312,067 117,799 38% 3 Virginia 3,685,674 1,382,878 38% 4 New Jersey 4,236,533 1,569,393 37% 5 Minnesota 2,541,797 929,304 37% 6 Oregon 1,732,774 630,687 36% 7 Utah 1,124,569 394,199 35% 8 Colorado 2,331,974 795,253 34% 9 Delaware 420,472 142,121 34% 10 Rhode Island 501,586 168,972 34% 11 Wisconsin 2,728,034 897,243 33% 12 New York 9,116,699 2,938,724 32% 13 Georgia 4,447,966 1,390,784 31% 14 California 16,384,130 5,064,964 31% 15 North Carolina 4,144,875 1,263,566 30% 16 Illinois 6,008,183 1,722,444 29% 17 Ohio 5,409,661 1,522,872 28% 18 Maine 624,567 173,858 28% 19 Idaho 657,773 181,564 28% 20 Hawaii 648,846 179,067 28% 21 Michigan 4,534,729 1,245,675 27% 22 Pennsylvania 6,058,513 1,660,553 27% 23 Iowa 1,392,004 380,977 27% 24 Montana 472,039 128,703 27% 25 Vermont 316,053 85,819 27% 26 Missouri 2,683,562 720,126 27% 27 South Carolina 2,024,495 540,092 27% 28 Nebraska 846,101 221,596 26% 29 Kentucky 1,841,152 471,922 26% 30 Arizona 2,670,661 684,486 26% 31 Indiana 2,951,362 751,207 25% 32 Kansas 1,310,164 333,037 25% 33 Alabama 2,048,831 494,472 24% 34 Oklahoma 1,585,616 358,617 23% 35 New Mexico 912,316 194,109 21% 36 Arkansas 1,211,644 249,591 21% 37 Louisiana 1,960,107 399,900 20% 38 Mississippi 1,241,390 223,061 18% 39 West Virginia 778,130 133,050 17% 40 North Dakota 322,972 49,919 15% 41 New Hampshire 659,001 101,135 15% 42 Alaska 357,870 23,817 7% 43 Washington 3,144,952 171,914 5% 44 Nevada 1,243,552 52,939 4% 45 Wyoming 269,357 9,564 4% 46 South Dakota 385,157 11,364 3% 47 Tennessee 2,794,712 80,685 3% 48 Florida 8,910,654 241,766 3% 49 Texas 10,784,887 244,373 2% 50 United States 141,458,638 34,911,115 25% Table 4. State/Local Income Tax Deductions as Percentage of State AGI, 2009 State AGI (thousands) Amount of Income Tax Deducted % of AGI Rank New York $602,715,414 $36,662,094 6.1% 1 Maryland $183,270,842 $10,109,347 5.5% 2 California $996,255,774 $47,226,396 4.7% 3 District of Columbia $23,248,705 $1,222,580 5.3% 3 Oregon $85,985,693 $4,072,541 4.7% 4 Connecticut $135,992,688 $6,136,564 4.5% 5 New Jersey $299,573,872 $13,076,205 4.4% 6 Minnesota $145,272,483 $5,933,338 4.1% 7 Massachusetts $217,427,330 $8,693,696 4.0% 8 Wisconsin $139,548,333 $5,498,462 3.9% 9 North Carolina $201,872,716 $7,906,998 3.9% 10 Virginia $234,321,329 $8,474,600 3.6% 11 Maine $29,156,528 $1,052,425 3.6% 12 Rhode Island $27,102,430 $977,989 3.6% 13 Kentucky $84,008,606 $3,003,576 3.6% 14 Ohio $257,359,400 $8,683,793 3.4% 15 Georgia $211,990,964 $7,128,103 3.4% 16 Hawaii $33,438,301 $1,117,306 3.3% 17 Idaho $29,903,301 $997,034 3.3% 18 Utah $58,507,710 $1,919,396 3.3% 19 South Carolina $91,092,430 $2,971,172 3.3% 20 Delaware $23,454,311 $752,935 3.2% 21 Kansas $68,320,734 $2,132,346 3.1% 22 Iowa $69,594,645 $2,076,026 3.0% 23 Vermont $15,391,243 $455,680 3.0% 24 Montana $21,250,414 $622,474 2.9% 25 Missouri $131,801,960 $3,838,068 2.9% 26 Nebraska $42,705,522 $1,240,308 2.9% 27 Arkansas $54,627,697 $1,583,598 2.9% 28 Pennsylvania $324,848,944 $9,282,945 2.9% 29 Colorado $137,052,679 $3,818,162 2.8% 30 Mississippi $51,046,523 $1,369,496 2.7% 31 Michigan $218,495,392 $5,616,785 2.6% 32 Indiana $138,570,251 $3,545,285 2.6% 33 West Virginia $34,933,974 $859,081 2.5% 34 Oklahoma $77,280,743 $1,887,258 2.4% 35 Arizona $135,328,404 $3,044,931 2.3% 36 Alabama $95,601,574 $2,115,105 2.2% 37 Louisiana $96,308,288 $2,074,033 2.2% 38 Illinois $350,438,403 $7,184,095 2.1% 39 New Mexico $40,772,124 $800,714 2.0% 40 North Dakota $16,662,417 $225,141 1.4% 41 New Hampshire $39,360,849 $427,618 1.1% 42 Nevada $67,548,185 $322,515 0.5% 43 Florida $452,703,287 $2,142,516 0.5% 44 Wyoming $16,035,428 $74,778 0.5% 45 Washington $186,216,727 $717,763 0.4% 46 Tennessee $130,485,371 $430,998 0.3% 47 South Dakota $18,983,043 $58,182 0.3% 48 Texas $588,289,807 $1,253,727 0.2% 49 Alaska $20,209,830 $26,664 0.1% 50 United States $7,801,040,718 $243,410,355 3.1% Table 5. Percentage of Taxpayers Deducting State and/or Local Sales Taxes, 2009 State Number of returns State and local general sales tax: Returns Claiming Deduction % of total Rank Washington 3,144,952 848,756 27% 1 Nevada 1,243,552 316,038 25% 2 Florida 8,910,654 1,967,191 22% 3 Texas 10,784,887 2,109,412 20% 4 Tennessee 2,794,712 526,687 19% 5 Wyoming 269,357 49,619 18% 6 South Dakota 385,157 56,999 15% 7 Arizona 2,670,661 240,670 9% 8 Alaska 357,870 24,899 7% 9 New Jersey 4,236,533 257,376 6% 10 California 16,384,130 898,505 5% 11 Mississippi 1,241,390 66,945 5% 12 Illinois 6,008,183 299,722 5% 13 Idaho 657,773 32,350 5% 14 Alabama 2,048,831 92,913 5% 15 Kansas 1,310,164 57,163 4% 16 Georgia 4,447,966 192,664 4% 17 Colorado 2,331,974 98,642 4% 18 Michigan 4,534,729 185,781 4% 19 Hawaii 648,846 25,530 4% 20 Oklahoma 1,585,616 62,179 4% 21 North Dakota 322,972 12,637 4% 22 Utah 1,124,569 43,075 4% 23 New Mexico 912,316 34,593 4% 24 New York 9,116,699 337,729 4% 25 Connecticut 1,711,715 61,432 4% 26 Arkansas 1,211,644 42,798 4% 27 North Carolina 4,144,875 145,512 4% 28 South Carolina 2,024,495 69,840 3% 29 Louisiana 1,960,107 64,131 3% 30 Nebraska 846,101 27,131 3% 31 Missouri 2,683,562 79,606 3% 32 Iowa 1,392,004 39,765 3% 33 Kentucky 1,841,152 48,560 3% 34 Pennsylvania 6,058,513 156,888 3% 35 Minnesota 2,541,797 65,380 3% 36 Virginia 3,685,674 92,548 3% 37 Rhode Island 501,586 12,200 2% 38 Maryland 2,751,233 65,095 2% 39 Wisconsin 2,728,034 63,681 2% 40 Ohio 5,409,661 119,171 2% 41 Maine 624,567 13,692 2% 42 Vermont 316,053 6,323 2% 43 District of Columbia 312,067 6,351 2% 43 Massachusetts 3,171,888 60,359 2% 44 Indiana 2,951,362 37,972 1% 45 West Virginia 778,130 7,782 1% 46 New Hampshire 659,001 3,694 1% 47 Delaware 420,472 1,405 0% 48 Montana 472,039 1,542 0% 49 Oregon 1,732,774 4,993 0% 50 United States 141,458,638 10,193,380 7% Table 6. State/Local Sales Tax Deductions as Percentage of State AGI, 2009 State AGI (thousands) Amount of Sales Tax Deducted (thousands) % of AGI Rank Washington $186,216,727 $1,815,054 0.97% 1 Tennessee $130,485,371 $1,099,088 0.84% 2 Texas $588,289,807 $3,975,121 0.68% 3 Nevada $67,548,185 $456,216 0.68% 4 Florida $452,703,287 $2,569,025 0.57% 5 South Dakota $18,983,043 $80,480 0.42% 6 Wyoming $16,035,428 $59,362 0.37% 7 Arizona $135,328,404 $299,638 0.22% 8 Mississippi $51,046,523 $96,442 0.19% 9 Alaska $20,209,830 $26,470 0.13% 10 Alabama $95,601,574 $121,720 0.13% 11 Louisiana $96,308,288 $118,077 0.12% 12 Arkansas $54,627,697 $65,824 0.12% 13 California $996,255,774 $1,160,294 0.12% 14 Idaho $29,903,301 $34,688 0.12% 15 Illinois $350,438,403 $400,041 0.11% 16 New Mexico $40,772,124 $46,420 0.11% 17 Oklahoma $77,280,743 $86,740 0.11% 18 Kansas $68,320,734 $73,527 0.11% 19 Utah $58,507,710 $52,308 0.09% 20 Georgia $211,990,964 $185,557 0.09% 21 New York $602,715,414 $484,621 0.08% 22 Colorado $137,052,679 $110,020 0.08% 23 New Jersey $299,573,872 $239,736 0.08% 24 Michigan $218,495,392 $165,024 0.08% 25 Missouri $131,801,960 $98,414 0.07% 26 South Carolina $91,092,430 $67,678 0.07% 27 North Carolina $201,872,716 $147,077 0.07% 28 Hawaii $33,438,301 $24,304 0.07% 29 Nebraska $42,705,522 $29,754 0.07% 30 North Dakota $16,662,417 $11,383 0.07% 31 Iowa $69,594,645 $38,659 0.06% 32 Ohio $257,359,400 $137,343 0.05% 33 Kentucky $84,008,606 $42,959 0.05% 34 Pennsylvania $324,848,944 $157,437 0.05% 35 Minnesota $145,272,483 $62,494 0.04% 36 Wisconsin $139,548,333 $59,942 0.04% 37 Virginia $234,321,329 $99,385 0.04% 38 Rhode Island $27,102,430 $10,445 0.04% 39 Vermont $15,391,243 $5,867 0.04% 40 Connecticut $135,992,688 $49,656 0.04% 41 Indiana $138,570,251 $46,646 0.03% 42 Maryland $183,270,842 $56,538 0.03% 43 Maine $29,156,528 $8,142 0.03% 44 District of Columbia $23,248,705 $7,136 0.03% 44 West Virginia $34,933,974 $8,682 0.02% 45 Massachusetts $217,427,330 $40,603 0.02% 46 Oregon $85,985,693 $8,621 0.01% 47 Delaware $23,454,311 $2,268 0.01% 48 Montana $21,250,414 $1,916 0.01% 49 New Hampshire $39,360,849 $3,000 0.01% 50 United States $7,801,040,718 $15,287,544 0.20% Table 7. Percentage of Taxpayers Deducting Either Tax, 2009 State Number of Return Returns Deducting Either Tax % of total Rank Maryland 2,751,233 1,327,100 48% 1 Connecticut 1,711,715 738,437 43% 2 New Jersey 4,236,533 1,826,769 43% 3 Virginia 3,685,674 1,475,426 40% 4 Massachusetts 3,171,888 1,253,846 40% 5 District of Columbia 312,067 124,150 40% 5 Minnesota 2,541,797 994,684 39% 6 Utah 1,124,569 437,274 39% 7 Colorado 2,331,974 893,895 38% 8 Oregon 1,732,774 635,680 37% 9 California 16,384,130 5,963,469 36% 10 Rhode Island 501,586 181,172 36% 11 New York 9,116,699 3,276,453 36% 12 Georgia 4,447,966 1,583,448 36% 13 Wisconsin 2,728,034 960,924 35% 14 Arizona 2,670,661 925,156 35% 15 Delaware 420,472 143,526 34% 16 North Carolina 4,144,875 1,409,078 34% 17 Illinois 6,008,183 2,022,166 34% 18 Idaho 657,773 213,914 33% 19 Washington 3,144,952 1,020,670 32% 20 Michigan 4,534,729 1,431,456 32% 21 Hawaii 648,846 204,597 32% 22 Ohio 5,409,661 1,642,043 30% 23 Iowa 1,392,004 420,742 30% 24 South Carolina 2,024,495 609,932 30% 25 Maine 624,567 187,550 30% 26 Pennsylvania 6,058,513 1,817,441 30% 27 Missouri 2,683,562 799,732 30% 28 Kansas 1,310,164 390,200 30% 29 Nevada 1,243,552 368,977 30% 30 Nebraska 846,101 248,727 29% 31 Vermont 316,053 92,142 29% 32 Alabama 2,048,831 587,385 29% 33 Kentucky 1,841,152 520,482 28% 34 Montana 472,039 130,245 28% 35 Indiana 2,951,362 789,179 27% 36 Oklahoma 1,585,616 420,796 27% 37 New Mexico 912,316 228,702 25% 38 Florida 8,910,654 2,208,957 25% 39 Arkansas 1,211,644 292,389 24% 40 Louisiana 1,960,107 464,031 24% 41 Mississippi 1,241,390 290,006 23% 42 Wyoming 269,357 59,183 22% 43 Texas 10,784,887 2,353,785 22% 44 Tennessee 2,794,712 607,372 22% 45 North Dakota 322,972 62,556 19% 46 West Virginia 778,130 140,832 18% 47 South Dakota 385,157 68,363 18% 48 New Hampshire 659,001 104,829 16% 49 Alaska 357,870 48,716 14% 50 United States 141,458,638 45,104,495 32% Table 8. Combined Deductions as Percentage of AGI State AGI (thousands) Total Amount of Either Tax Deducted (thousands) % of total Rank New York $602,715,414 $37,146,715 6.2% 1 Maryland $183,270,842 $10,165,885 5.5% 2 California $996,255,774 $48,386,690 4.9% 3 District of Columbia $23,248,705 $1,229,716 5.3% 3 Oregon $85,985,693 $4,081,162 4.7% 4 Connecticut $135,992,688 $6,186,220 4.5% 5 New Jersey $299,573,872 $13,315,941 4.4% 6 Minnesota $145,272,483 $5,995,832 4.1% 7 Massachusetts $217,427,330 $8,734,299 4.0% 8 North Carolina $201,872,716 $8,054,075 4.0% 9 Wisconsin $139,548,333 $5,558,404 4.0% 10 Virginia $234,321,329 $8,573,985 3.7% 11 Rhode Island $27,102,430 $988,434 3.6% 12 Maine $29,156,528 $1,060,567 3.6% 13 Kentucky $84,008,606 $3,046,535 3.6% 14 Idaho $29,903,301 $1,031,722 3.5% 15 Georgia $211,990,964 $7,313,660 3.4% 16 Ohio $257,359,400 $8,821,136 3.4% 17 Hawaii $33,438,301 $1,141,610 3.4% 18 Utah $58,507,710 $1,971,704 3.4% 19 South Carolina $91,092,430 $3,038,850 3.3% 20 Kansas $68,320,734 $2,205,873 3.2% 21 Delaware $23,454,311 $755,203 3.2% 22 Iowa $69,594,645 $2,114,685 3.0% 23 Arkansas $54,627,697 $1,649,422 3.0% 24 Vermont $15,391,243 $461,547 3.0% 25 Missouri $131,801,960 $3,936,482 3.0% 26 Nebraska $42,705,522 $1,270,062 3.0% 27 Montana $21,250,414 $624,390 2.9% 28 Pennsylvania $324,848,944 $9,440,382 2.9% 29 Mississippi $51,046,523 $1,465,938 2.9% 30 Colorado $137,052,679 $3,928,182 2.9% 31 Michigan $218,495,392 $5,781,809 2.6% 32 Indiana $138,570,251 $3,591,931 2.6% 33 Oklahoma $77,280,743 $1,973,998 2.6% 34 West Virginia $34,933,974 $867,763 2.5% 35 Arizona $135,328,404 $3,344,569 2.5% 36 Alabama $95,601,574 $2,236,825 2.3% 37 Louisiana $96,308,288 $2,192,110 2.3% 38 Illinois $350,438,403 $7,584,136 2.2% 39 New Mexico $40,772,124 $847,134 2.1% 40 North Dakota $16,662,417 $236,524 1.4% 41 Washington $186,216,727 $2,532,817 1.4% 42 Tennessee $130,485,371 $1,530,086 1.2% 43 Nevada $67,548,185 $778,731 1.2% 44 New Hampshire $39,360,849 $430,618 1.1% 45 Florida $452,703,287 $4,711,541 1.0% 46 Texas $588,289,807 $5,228,848 0.9% 47 Wyoming $16,035,428 $134,140 0.8% 48 South Dakota $18,983,043 $138,662 0.7% 49 Alaska $20,209,830 $53,134 0.3% 50 United States $7,801,040,718 $258,697,899 3.3% Topics Center for State Tax Policy Individual Income and Payroll Taxes Individual Tax Expenditures, Credits, and Deductions Research Sales Taxes
