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Allweather

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  2. Not really that simple. If you pay over the standard deduction which ranges from $14,600 to $29,200( depending on filing status) in state taxes you can deduct the taxes. If you do itemize the state taxes it is not dollar for dollar. Assume you are in a 25% marginal tax bracket and pay $30,000 in state taxes, you will save $7,500 in federal income taxes, $30,000 x 25%= $7,500. The $30,000 reduces your AGI by the $30,000 , which is what your federal tax is based. In reality , since the standard deduction i, say for a single person is $14,600, you will only save $30,000-$14,600 = $15,400 , $15,400 x 25%=$3,850. So only your federal taxes are reduced $3,850 by paying $30,000 in state taxes.
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