You are permitted under federal tax laws to claim the amount you pay for state and local income taxes as deductions. However, sales tax imposed on state and local levels are not considered eligible deductions on your federal tax form. As a result, taxpayers living in some states pay more taxes than those filing in other states. Also, in the event that you receive a refund on your state income tax, the amount will count as income on your next return. Other taxes involving foreign income, personal property, and self-employment businesses may be claimed as deductions as well. These tips are meant to provide general information on federal income taxes. For specific advice, please consult a tax advisor or call the toll-free number for Federal Tax Information and Assistance at 1-800-829-1040.