Taxes that are generally deductible from taxable income are property taxes and state and local taxes.

Taxes can feel like a maze, especially when you’re sorting out what really counts as a deduction. If you’ve been poking around the Intuit Academy’s Level 1 tax material, you’ve probably run into a simple, sturdy principle: some taxes can shrink your taxable income, and others can’t. The big takeaway today is this: property taxes and state and local taxes are generally deductible from your taxable income. Let’s unpack what that means in plain terms, with a few stories and examples that keep things tangible.

What does deductible actually mean?

Think of your tax return as a balance sheet for the year. You earn money, and then you subtract the costs and deductions that the tax code allows. A deduction reduces the amount of your income that’s taxed. If you itemize your deductions instead of taking the standard deduction, certain taxes you’ve paid can lower your taxable income. It’s basically a way to get a bit of relief on the money you’ve already handed over to government authorities in fees and taxes.

Two big players sit in the deductible category: property taxes and state and local taxes (often shortened to SALT). Here’s the key nuance many students notice—these aren’t endless write-offs. There’s a cap and a choice to be aware of, depending on how you file and what you paid during the year.

Property taxes: real estate, real impact

Property taxes are the charges you pay to the local government for owning real estate. If you own a home, you likely get an annual bill that reflects the assessed value of your property and the local tax rate. So what about deducting that on your tax return?

• What qualifies? Real estate taxes that are based on the value of the property and paid to a local jurisdiction. If you’ve paid those taxes in the year, they’re typically deductible as part of the SALT deduction.

• How much can you deduct? The deduction isn’t unlimited. When you itemize, you can include the property taxes you paid, but you’re subject to the SALT cap (more on that in a moment). In practice, that means you can reduce your taxable income by the amount of property tax you paid, up to the overall SALT limit.

• A simple example: If you paid $5,000 in property taxes during the year and you’re itemizing, you would include that $5,000 in your SALT total (subject to the cap). If you also paid other SALT taxes, they share that same cap.

State and local taxes: the SALT bundle

SALT stands for state and local taxes, and it’s the umbrella under which several tax payments fall. The main idea is straightforward: you have a choice when it comes to deduction—state income taxes or sales taxes (you pick one). Both can be deductible if you itemize.

• The components:

• State income taxes paid during the year (or, in some situations, local income taxes).

• Sales taxes paid (if you opt to deduct sales taxes instead of state income taxes).

• Property taxes, as discussed, are included in this bucket too.

• The big caveat: there’s a cap. The Tax Cuts and Jobs Act (which remains a key part of recent tax years) limits the total SALT deduction to $10,000 per year ($5,000 if you’re married filing separately). That cap blends property taxes and either state income taxes or sales taxes into a single ceiling.

• Practical impact: if you pay a lot in state income taxes and high property taxes, the cap means you won’t be able to deduct every dollar you paid. You’ll still get relief, but it’s more modest than in years without the cap.

Capital gains and other taxes: not deductible, usually

On the other side of the ledger, some taxes don’t qualify for a deduction. Capital gains taxes, which you owe on profits from selling investments, aren’t deductible. They’re a separate tax event that affects your after-tax income in a direct way, but not as a deduction against your current year’s income.

• Why not? Capital gains taxes are a liability tied to the sale of assets, not a tax paid on income or property. They’re treated differently in the tax code.

• Insurance against surprises: even though you can’t deduct capital gains taxes, you still benefit from capital gains planning in other areas (like holding investments longer to reduce tax rates on gains, or choosing tax-advantaged accounts).

Sales taxes: a flexible option, sometimes

Sales taxes can be deductible, but they’re a bit of a choose-your-path situation. You can either deduct state income taxes or deduct the sales taxes you paid, but not both. The sales tax deduction is particularly handy in states with no income tax or when sales taxes are high.

• How it works: you tally up the sales taxes you paid during the year and write them off instead of the state income tax, if you’re itemizing. If you’re in a state with high sales taxes and you didn’t pay a lot in state income tax, the sales tax deduction can be a nice benefit.

• The cap still applies: remember the SALT cap. Whether you deduct income tax or sales tax, you still have that $10,000 total (or $5,000 for married filing separately) ceiling to respect.

A practical scenario to anchor the idea

Let’s walk through a simple, relatable scenario to see how it plays out in real life.

• Imagine you’re a homeowner with:

• $6,000 in property taxes paid

• $9,000 in state income tax paid

• No sales tax deduction taken (you’re not itemizing in that scenario, or you’re trying to decide whether to itemize)

If you itemize, how much SALT deduction do you get? You can add up the property tax and the state income tax, which totals $15,000. But remember the cap: you’re limited to $10,000. So your SALT deduction would be $10,000 in this case.

If you decide to deduct sales taxes instead of income taxes, you’d tally your sales taxes. Suppose you paid $7,000 in sales taxes. You’d compare: is $7,000 more or less than your state income tax? You’d choose the higher option, still under the $10,000 cap when you combine property tax with the chosen SALT tax deduction.

The big takeaway here is how the cap shapes what you can deduct. It’s not just about where the money goes, but how the government sets limits on what you can subtract from your taxable income.

Why this matters beyond the numbers

If you’re studying Intuit Academy’s Level 1 material, you’ve probably noticed that these concepts aren’t just about “getting a smaller tax bill.” They’re about understanding how the tax system weighs different kinds of payments you’ve already made. Deductions are a way the code acknowledges the real costs of living in your home state, paying for local services, and funding public goods.

• It’s about choices: you often have a choice between deducting state income taxes or sales taxes. Your decision can depend on your spending patterns and where you live.

• It’s about timing: the taxes you paid within the year matter. Some people: paid bills early in December; others just before the year ends. When you file, you report what you actually paid.

• It’s about planning: if you foresee a year of high taxes—perhaps you’ll buy a home, or you anticipate a big state tax bill—you can plan your withholding and deductions to maximize the benefit.

Common-sense tips for applying these ideas

• Track what you pay. Keep records of property tax bills and any state or local tax payments. If you’re itemizing, these receipts become your evidence.

• Compare standard vs. itemized deductions. If your itemized total isn’t higher than the standard deduction, taking the standard deduction is usually simpler and just as good financially.

• Consider timing with an eye on the SALT cap. If you’re close to the cap, a little planning can matter. For example, you might time some deductible payments to stay within the limit for a given year.

• Don’t forget the nuances. If you’re in a jurisdiction with special local taxes or unique rules, some deductions could behave a bit differently. When in doubt, a quick consultation with a tax pro or a reliable software tool can save you headaches later.

Bringing it back to everyday sense

Here’s the truth: taxes aren’t a linear march of numbers; they’re a system designed to reflect real-world costs—home ownership, state and local services, and the way we spend money at the register. The deductible portion of those costs, specifically property taxes and SALT, is built to give you some relief for the taxes you’ve already paid. It’s not a free pass to erase every bill, but it’s a meaningful nudge in the right direction.

If you’re exploring the Level 1 material from Intuit Academy, you’ll notice how this topic pops up again and again. The idea isn’t to memorize a rule for the sake of it; it’s to understand how the tax code treats the costs you incur and how those costs show up on a tax return. When you see a property tax bill or a local tax notice come in, you’ll have a clearer sense of what portion might lower your taxable income, and why the cap exists.

A few closing thoughts

• Property taxes and state and local taxes are the core deductible taxes you’ll encounter in most individual scenarios, especially when you itemize.

• Capital gains taxes aren’t deductible in the same way; they’re a separate tax on profits from selling assets.

• The SALT cap matters. It reminds us that deductions aren’t unlimited, and smart planning helps you use the rules to your advantage.

If you’ve got that curiosity humming, you’re already on a solid track. The more you connect the dots—home ownership, local services, and the mechanics of deductions—the more confident you’ll feel with the material in the Level 1 module. And if you ever want to unpack a specific tax scenario or run through another example, I’m here to walk through it with you, step by step.

In the end, the simple question—Which taxes are generally deductible from taxable income?—boils down to a practical rule of thumb: property taxes and state and local taxes, with a careful eye on the SALT cap. It’s a neat, robust corner of the tax world, and understanding it gives you a solid edge when you read through real-world tax forms or run numbers in a tax software session.