I.R.C. § 164(a) General Rule —
Except as otherwise provided in this section, the following taxes shall be allowed
as a deduction for the taxable year within which paid or accrued:
I.R.C. § 164(a)(1) —
State and local, and foreign, real property taxes.
I.R.C. § 164(a)(2) —
State and local personal property taxes.
I.R.C. § 164(a)(3) —
State and local, and foreign, income, war profits, and excess profits taxes.
I.R.C. § 164(a)(4) —
The GST tax imposed on income distributions.
In addition, there shall be allowed
as a deduction State and local, and foreign, taxes not described in the preceding
sentence which are paid or accrued within the taxable year in carrying on a trade
or business or an activity described in section 212
(relating to expenses for production of income). Notwithstanding the
preceding sentence, any tax (not described in the first sentence of this subsection)
which is paid or accrued by the taxpayer in connection with an acquisition or disposition
of property shall be treated as part of the cost of the acquired property or, in
the case of a disposition, as a reduction in the amount realized on the disposition.
I.R.C. § 164(b) Definitions And Special Rules —
For purposes of this section—
I.R.C. § 164(b)(1) Personal Property Taxes —
The term “personal property tax” means an ad valorem tax which is imposed
on an annual basis in respect of personal property.
I.R.C. § 164(b)(2) State Or Local Taxes —
A State or local tax includes only a tax imposed by a State, a possession of the
United States, or a political subdivision of any of the foregoing, or by the District
of Columbia.
I.R.C. § 164(b)(3) Foreign Taxes —
A foreign tax includes only a tax imposed by the authority of a foreign country.
I.R.C. § 164(b)(4) Special Rules For GST Tax
I.R.C. § 164(b)(4)(A) In General —
The GST tax imposed on income distributions is—
I.R.C. § 164(b)(4)(A)(i) —
the tax imposed by section 2601, and
I.R.C. § 164(b)(4)(A)(ii) —
any State tax described in section 2604 (as in effect before its repeal),
but only to the extent such tax is
imposed on a transfer which is included in the gross income of the
distributee and to which section 666 does not apply.
I.R.C. § 164(b)(4)(B) Special Rule For Tax Paid Before Due Date —
Any tax referred to in subparagraph (A) imposed with respect to a transfer occurring during the taxable year of the distributee
(or, in the case of a taxable termination, the trust) which is paid not later than
the time prescribed by law (including extensions)
for filing the return with respect to such transfer shall be treated as having been
paid on the last day of the taxable year in which the transfer was made.
I.R.C. § 164(b)(5) General Sales Taxes —
For purposes of subsection (a)—
I.R.C. § 164(b)(5)(A) Election To Deduct State And Local Sales Taxes In Lieu Of State And Local Income Taxes —
At the election of the taxpayer for the taxable year, subsection (a) shall be applied—
I.R.C. § 164(b)(5)(A)(i) —
without regard to the reference to State and local income taxes, and
I.R.C. § 164(b)(5)(A)(ii) —
as if State and local general sales taxes were referred to in a paragraph thereof.
I.R.C. § 164(b)(5)(B) Definition Of General Sales Tax —
The term “general sales tax” means a tax imposed at one rate with respect
to the sale at retail of a broad range of classes of items.
I.R.C. § 164(b)(5)(C) Special Rules For Food, Etc. —
In the case of items of food, clothing, medical supplies, and motor vehicles—
I.R.C. § 164(b)(5)(C)(i) —
the fact that the tax does not apply with respect to some or all of such items shall
not be taken into account in determining whether the tax applies with respect to
a broad range of classes of items, and
I.R.C. § 164(b)(5)(C)(ii) —
the fact that the rate of tax applicable with respect to some or all of such items
is lower than the general rate of tax shall not be taken into account in determining
whether the tax is imposed at one rate.
I.R.C. § 164(b)(5)(D) Items Taxed At Different Rates —
Except in the case of a lower rate of tax applicable with respect to an item described
in subparagraph (C), no deduction shall be allowed under this paragraph for any general sales tax imposed
with respect to an item at a rate other than the general rate of tax.
I.R.C. § 164(b)(5)(E) Compensating Use Taxes —
A compensating use tax with respect to an item shall be treated as a general sales
tax. For purposes of the preceding sentence, the term “compensating use tax”
means, with respect to any item, a tax which—
I.R.C. § 164(b)(5)(E)(i) —
is imposed on the use, storage, or consumption of such item, and
I.R.C. § 164(b)(5)(E)(ii) —
is complementary to a general sales tax, but only if a deduction is allowable under
this paragraph with respect to items sold at retail in the taxing jurisdiction which
are similar to such item.
I.R.C. § 164(b)(5)(F) Special Rule For Motor Vehicles —
In the case of motor vehicles, if the rate of tax exceeds the general rate, such
excess shall be disregarded and the general rate shall be treated as the rate of
tax.
I.R.C. § 164(b)(5)(G) Separately Stated General Sales Taxes —
If the amount of any general sales tax is separately stated, then, to the extent
that the amount so stated is paid by the consumer (other than in connection with
the consumer's trade or business) to the seller, such amount shall be treated as
a tax imposed on, and paid by, such consumer.
I.R.C. § 164(b)(5)(H) Amount Of Deduction May Be Determined Under Tables
I.R.C. § 164(b)(5)(H)(i) In General —
At the election of the taxpayer for the taxable year, the amount of the deduction
allowed under this paragraph for such year shall be—
I.R.C. § 164(b)(5)(H)(i)(I) —
the amount determined under this paragraph
(without regard to this subparagraph) with respect to motor vehicles, boats, and
other items specified by the Secretary, and
I.R.C. § 164(b)(5)(H)(i)(II) —
the amount determined under tables prescribed by the Secretary with respect to items
to which subclause (I) does not apply.
I.R.C. § 164(b)(5)(H)(ii) Requirements For Tables —
The tables prescribed under clause (i)—
I.R.C. § 164(b)(5)(H)(ii)(I) —
shall reflect the provisions of this paragraph,
I.R.C. § 164(b)(5)(H)(ii)(II) —
shall be based on the average consumption by taxpayers on a State-by-State basis
(as determined by the Secretary)
of items to which clause (i)(I)
does not apply, taking into account filing status, number of dependents,
adjusted gross income, and rates of State and local general sales
taxation, and
I.R.C. § 164(b)(5)(H)(ii)(III) —
need only be determined with respect to adjusted gross incomes up to the applicable
amount (as determined under section 68(b)).
I.R.C. § 164(b)(6) Limitation On Individual Deductions For Taxable Years 2018 Through 2025 —
In the case of an individual and a taxable year beginning after December 31, 2017,
and before January 1, 2026—
I.R.C. § 164(b)(6)(A) —
foreign real property taxes shall not be taken into account under subsection (a)(1),
and
I.R.C. § 164(b)(6)(B) —
the aggregate amount of taxes taken into account under paragraphs (1), (2), and (3)
of subsection (a) and paragraph
(5) of this subsection for any taxable year shall not exceed $10,000
($5,000 in the case of a married individual filing a separate return).
The preceding sentence shall not apply to any foreign taxes described in subsection
(a)(3) or to any taxes described in paragraph (1) and (2) of subsection (a) which
are paid or accrued in carrying on a trade or business or an activity described in
section 212. For purposes of subparagraph (B), an amount paid in a taxable year beginning before
January 1, 2018, with respect to a State or local income tax imposed for a taxable
year beginning after December 31, 2017, shall be treated as paid on the last day of
the taxable year for which such tax is so imposed.
I.R.C. § 164(c) Deduction Denied In Case Of Certain Taxes —
No deduction shall be allowed for the following taxes:
I.R.C. § 164(c)(1) —
Taxes assessed against local benefits of a kind tending to increase the value of
the property assessed;
but this paragraph shall not prevent the deduction of so much of such taxes as is
properly allocable to maintenance or interest charges.
I.R.C. § 164(c)(2) —
Taxes on real property, to the extent that subsection (d) requires such taxes to be treated as imposed on another taxpayer.
I.R.C. § 164(d) Apportionment Of Taxes On Real Property Between Seller And Purchaser
I.R.C. § 164(d)(1) General Rule —
For purposes of subsection (a), if real property is sold during any real property tax year, then—
I.R.C. § 164(d)(1)(A) —
so much of the real property tax as is properly allocable to that part of such year
which ends on the day before the date of the sale shall be treated as a tax imposed
on the seller, and
I.R.C. § 164(d)(1)(B) —
so much of such tax as is properly allocable to that part of such year which begins
on the date of the sale shall be treated as a tax imposed on the purchaser.
I.R.C. § 164(d)(2) Special Rules
I.R.C. § 164(d)(2)(A) —
in the case of any sale of real property, if—
I.R.C. § 164(d)(2)(A)(i) —
a taxpayer may not, by reason of his method of accounting, deduct any amount for
taxes unless paid, and
I.R.C. § 164(d)(2)(A)(ii) —
the other party to the sale is (under the law imposing the real property tax) liable
for the real property tax for the real property tax year,
then for purposes of subsection (a) the taxpayer shall be treated as having paid, on the date of the sale, so much
of such tax as, under paragraph (1) of this subsection, is treated as imposed on the taxpayer. For purposes of the preceding
sentence, if neither party is liable for the tax, then the party holding the property
at the time the tax becomes a lien on the property shall be considered liable for
the real property tax for the real property tax year.
I.R.C. § 164(d)(2)(B) —
In the case of any sale of real property, if the taxpayer's taxable income for the
taxable year during which the sale occurs is computed under an accrual method of
accounting, and if no election under section 461(c)
(relating to the accrual of real property taxes) applies, then, for
purposes of subsection (a), that portion of such tax which—
I.R.C. § 164(d)(2)(B)(i) —
is treated, under paragraph (1) of this subsection, as imposed on the taxpayer, and
I.R.C. § 164(d)(2)(B)(ii) —
may not, by reason of the taxpayer's method of accounting, be deducted by the taxpayer
for any taxable year,
shall be treated as having accrued on the date of the sale.
I.R.C. § 164(e) Taxes Of Shareholder Paid By Corporation —
Where a corporation pays a tax imposed on a shareholder on his interest as a shareholder,
and where the shareholder does not reimburse the corporation, then—
I.R.C. § 164(e)(1) —
the deduction allowed by subsection (a) shall be allowed to the corporation; and
I.R.C. § 164(e)(2) —
no deduction shall be allowed the shareholder for such tax.
I.R.C. § 164(f) Deduction For One-Half Of Self-Employment Taxes
I.R.C. § 164(f)(1) In General —
In the case of an individual, in addition to the taxes described in subsection (a), there shall be allowed as a deduction for the taxable year an amount equal to one-half
of the taxes imposed by section 1401 (other than the taxes imposed by section 1401(b)(2))
for such taxable year.
I.R.C. § 164(f)(2) Deduction Treated As Attributable To Trade Or Business —
For purposes of this chapter, the deduction allowed by paragraph (1) shall be treated as attributable to a trade or business carried on by the taxpayer
which does not consist of the performance of services by the taxpayer as an employee.
I.R.C. § 164(g) Cross References
I.R.C. § 164(g)(1) —
For provisions disallowing any deduction for certain taxes, see section 275Link.
I.R.C. § 164(g)(2) —
For treatment of taxes imposed by Indian tribal governments (or their subdivisions),
see section 7871.
(Aug. 16, 1954, ch. 736, 68A Stat. 47; Sept. 2, 1958, Pub. L. 85-866, title I, 6(a), 72 Stat. 1608; Feb. 26, 1964, Pub. L.
88-272, title II, 207(a), (b)(1), (2), 78 Stat. 40-42; Oct. 27, 1972, Pub. L. 92-580, 4(a), 86 Stat. 1277; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1901(a)(25), 1951(b)(3)(A), 90 Stat. 1767, 1837; Nov. 6, 1978, Pub. L. 95-600, title I, 111(a), (b), 92 Stat. 2777;
Apr. 2, 1980, Pub. L. 96-223,
title I, 101(b), 94 Stat. 250; Jan. 14, 1983, Pub. L. 97-473, title II, 202(b)(3), 96 Stat. 2609; July 18, 1984, Pub. L. 98-369, div. A, title IV, 474(r)(29)(F), 98 Stat. 844; Oct. 17, 1986, Pub. L. 99-499, title V, 516(b)(2)(A), 100 Stat. 1771; Oct. 22, 1986, Pub. L. 99-514, title I, 134, title XIV, 1432(a)(1), (2), 100 Stat. 2116, 2729; Aug. 23, 1988, Pub. L. 100-418, title I, 1941(b)(2)(A), 102 Stat. 1323; Nov. 10, 1988, Pub. L. 100-647, title I, 1018(u)(11), 102 Stat. 3590;
Aug. 20, 1996, Pub. L. 104-188, title I, 1704(t)(79), 110 Stat. 1755; Oct. 22, 2004, Pub. L. 108-357, title V, 501(a), 118 Stat. 1418; Dec. 21, 2005, Pub. L. 109-135, title IV, 403(r)(1), 119 Stat. 2577;
Dec. 20, 2006, Pub. L. 109-432, div. A, title I, Sec. 103(a), 120 Stat. 2922; Pub. L. 110-343, div. C, title II, Sec. 201(a), Oct. 3, 2008, 122 Stat. 3765; Pub. L. 111-5, div. B, title I, Sec. 1008, Feb. 17, 2009, 123 Stat. 115; Pub. L. 111-148, Sec. 9015(b)(2)(A), Mar. 23, 2010, 124 Stat. 119; Pub. L. 111-312, Sec. 722, Dec. 17, 2010, 124 Stat. 3296; Pub. L. 112-240, title II, Sec. 205(a), Jan. 2, 2013, 126 Stat. 2313; Pub. L. 113-295, Div. A, title I, Sec. 105(a), title II, Sec. 209(c), 221(a)(12)(D), 221(a)(26),
221(a)(95)(B)(ii), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 114-113, Div. Q, title I, Sec. 106(a); Pub. L. 115-97, title I, Sec. 11042(a), Dec. 22, 2017, 131 Stat. 2054.)
BACKGROUND NOTES
AMENDMENTS
2017 -
Subsec. (b). Pub. L. 115-97, Sec. 11042(a), amended subsec. (b), by adding new par. (6).
2015 - Subsec. (b)(5)(I). Pub. L. 114-113, Div. Q, Sec. 106(a), struck subpar. (I). Before being struck, it read as follows:
“(I) Application Of Paragraph.—This paragraph shall apply to taxable years
beginning after December 31,
2003, and before January 1, 2015.”
2014 - Subsec. (a)(5). Pub. L. 113-295, Div. A, Sec. 221(a)(12)(D), amended subsec. (a) by striking par. (5). Before being
struck, it read as follows:
“(5) The environmental tax imposed by section 59A.
Subsec. (a)(6). Pub. L. 113-295, Div. A, Sec. 221(a)(26), amended subsec.
(a) by striking par. (6). Before being struck, it read as follows:
“(6) Qualified motor vehicle taxes.”
Subsec. (b)(4)(A)(ii). Pub. L. 113-295, Div. A, Sec. 221(a)(95)(B)(ii), amended clause (ii) by inserting “(as in effect
before its repeal)”
after “section 2604”.
Subsec. (b)(5)(I). Pub. L. 113-295, Div. A, Sec. 105(a), amended subpar.
(I) by substituting “January 1, 2015” for “January 1, 2014”.
Subsec. (b)(6)(E)-(G). Pub. L. 113-295, Div. A, Sec. 209(c)(1), amended par. (6) by striking subpar. (E) and by redesignating
par.
(F)-(G) as par. (E)-(F), respectively. Before being struck, subpar.
(E) read as follows:
“(E) Qualified Motor Vehicle Taxes Not Included In Cost Of Acquired Property.—The
last sentence of subsection
(a) shall not apply to any qualified motor vehicle taxes.”
Subsec. (b)(6)(E). Pub. L. 113-295, Div. A, Sec. 209(c)(2), amended subpar.
(E), after redesignation, by substituting “Subsection (a)(6)”
for “This paragraph”.
Subsec. (b)(6)(F). Pub. L. 113-295, Div. A, Sec. 209(c)(2), amended subpar.
(F), after redesignation, by substituting “Subsection (a)(6)”
for “This paragraph”.
Subsec. (b)(6). Pub. L. 113-295, Div. A, Sec. 221(a)(26), amended subsec.
(b) by striking par. (6). Before being struck, it read as follows:
“(6) (6) Qualified Motor Vehicle Taxes.—(A)
In General.—For purposes of this section, the term “qualified motor vehicle
taxes” means any State or local sales or excise tax imposed on the purchase
of a qualified motor vehicle. (B) Limitation Based On Vehicle Price.—The amount
of any State or local sales or excise tax imposed on the purchase of a qualified motor
vehicle taken into account under subparagraph (A) shall not exceed the portion of
such tax attributable to so much of the purchase price as does not exceed $49,500.
“(C) Income Limitation.—The amount otherwise taken into account under
subparagraph (after the application of subparagraph (B)) for any taxable year shall
be reduced (but not below zero) by the amount which bears the same ratio to the amount
which is so treated as—
“ (i) the excess (if any) of—
“(I) the taxpayer's modified adjusted gross income for such taxable year, over
“(II) $125,000 ($250,000 in the case of a joint return), bears to
“(ii) $10,000. For purposes of the preceding sentence, the term “modified
adjusted gross income” means the adjusted gross income of the taxpayer for the
taxable year (determined without regard to sections 911, 931, and 933).
“(D) Qualified Motor Vehicle.—For purposes of this paragraph—
“(i) In General.—The term “qualified motor vehicle” means—
“(I) a passenger automobile or light truck which is treated as a motor vehicle
for purposes of title II of the Clean Air Act, the gross vehicle weight rating of
which is not more than 8,500 pounds, and the original use of which commences with
the taxpayer,
“(II) a motorcycle the gross vehicle weight rating of which is not more than
8,500 pounds and the original use of which commences with the taxpayer, and
“(III) a motor home the original use of which commences with the taxpayer.
“(ii) Other Terms.—The terms “motorcycle”
and “motor home” have the meanings given such terms under section 571.3
of title 49, Code of Federal Regulations (as in effect on the date of the enactment
of this paragraph).
“(E) Coordination With General Sales Tax.—Subsection
(a)(6) shall not apply in the case of a taxpayer who makes an election under paragraph
(5) for the taxable year.
“(F) Termination.—Subsection (a)(6)
shall not apply to purchases after December 31, 2009.”
2013 - Subsec. (b)(5)(I).Pub. L. 112-240, Sec. 205(a), amended subpar. (I) by substituting “January 1, 2014”
for “January 1, 2012”.
2010 - Subsec. (b)(5)(I). Pub. L. 111-312, Sec. 722(a), amended subpar. (I) by substituting “January 1, 2012”
for “January 1, 2010”.
Subsec. (f). Pub. L. 111-148, Sec. 9015(b)(2)(A), amended subsec. (f) by inserting “(other than the taxes imposed by section
1401(b)(2))” after “section 1401)”.
2009 - Subsec. (a)(6). Pub. L. 111-5, Div. B, Sec. 1008(a), amended subsec. (a)
by adding par. (6).
Subsec. (b)(6). Pub. L. 111-5, Div. B, Sec. 1008(b), amended subsec. (b)
by adding par. (6).
2008 - Subsec. (b)(5)(I).Pub. L. 110-343, Div. C, Sec. 201(a), amended subpar. (I) by substituting “January 1, 2010”
for “January 1, 2008”.
2006 - Subsec. (b)(5)(I).Pub. L. 109-432, sec. 103(a), amended subpar. (I) by substituting “2008” for “2006”.
2005 - Subsec. (b)(5)(A).Pub. L. 109-135, sec. 403(r)(1), amended subpar. (A). Before amendment, it read as follows:
“(A) ELECTION TO DEDUCT STATE AND LOCAL SALES TAXES IN LIEU OF STATE AND LOCAL
INCOME TAXES-
“(i) IN GENERAL-
“At the election of the taxpayer for the taxable year, subsection (a) shall
be applied--
“(I) without regard to the reference to State and local income taxes, and
“(II) as if State and local general sales taxes were referred to in a paragraph
thereof.”
2004 -- Subsec. (a). Pub. L. 108-357, sec. 501(a) added par. (5).
1996--Subsec. (a). Pub. L. 104-188, sec. 1704(t)(79) struck out paragraphs (4) and (5) and added new paragraphs (4) and (5). Prior to
amendment the paragraphs read as follows:
‘(4) The environmental tax imposed by section 59A.
‘(5) The GST tax imposed on income distributions.’
1988--Subsec. (a)(4). Pub. L. 100-418 struck out par.
(4) relating to windfall profit tax imposed by section 4986 and redesignated par.
(5) relating to environmental tax as (4).
Subsec. (a)(5). Pub. L. 100-647 substituted “The GST” for “the GST”.
Pub. L. 100-418 redesignated par. (5), relating to environmental tax, as (4).
1986--Subsec. (a). Pub. L. 99-514, 134(a)(2), inserted
“Notwithstanding the preceding sentence, any tax (not described in the first
sentence of this subsection) which is paid or accrued by the taxpayer in connection
with an acquisition or disposition of property shall be treated as part of the cost
of the acquired property or, in the case of a disposition, as a reduction in the amount
realized on the disposition.”
Subsec. (a)(4). Pub. L. 99-514, 134(a)(1), struck out par. (4) relating to “State and local general sales
taxes” and redesignated as par.
(4) former par. (5) relating to windfall profit tax.
Subsec. (a)(5). Pub. L. 99-514, 1432(a)(1), added par. (5) relating to GST tax imposed on income distributions.
Pub. L. 99-499 added par. (5) relating to environmental tax.
Subsec. (b)(2). Pub. L. 99-514, 134(b)(1), (2), redesignated par. (3)
as (2) and struck out former par. (2), general sales taxes provisions, subpars. (A)
to (E) of which covered in general rule, special rules for food, etc., items taxed
at different rates, compensating use taxes, and special rules for motor vehicles,
respectively.
Subsec. (b)(3). Pub. L. 99-514, 134(b)(2), redesignated par. (4) as (3). Former par. (3) redesignated (2).
Subsec. (b)(4). Pub. L. 99-514, 1432(a)(2), added par. (4).
Pub. L. 99-514, 134(b)(2), redesignated par. (4) as (3).
Subsec. (b)(5). Pub. L. 99-514, 134(b)(1), struck out par. (5), separately stated general sales taxes, which read
as follows: “If the amount of any general sales tax is separately stated, then,
to the extent that the amount so stated is paid by the consumer (otherwise than in
connection with the consumer's trade or business) to his seller, such amount shall
be treated as a tax imposed on, and paid by, such consumer.”
1984--Subsec. (f). Pub. L. 98-369 redesignated pars.
(2) and (3) as pars. (1) and (2), respectively. Former par. (1), which referred to
section 1451 for provisions disallowing any deduction for the payment of the tax imposed
by subchapter B of chapter 3 (relating to tax-free covenant bonds), was struck out.
1983 - Subsec. (f)-(g). Pub. L. 98-21, 124(c)(1) redesignated subsec. (f) as subsec.
(g) and added a new subsec. (f). that, applicable to taxable years beginning after
Dec. 31, 1989, subsec. (f) of this section is redesignated
(g) and a new subsec. (f).
Subsec. (f)(3). Pub. L. 97-473 added par. (3).
1980--Subsec. (a)(5). Pub. L. 96-223 added par. (5).
1978--Subsec. (a)(5). Pub. L. 95-600, 111(a), struck out par. (5) relating to a deduction for State and local taxes on
the sale of gasoline, diesel fuel, and other motor fuels.
Subsec. (b)(5). Pub. L. 95-600, 111(b), struck out in heading “and gasoline taxes” after “sales
taxes”, and in text “or of any tax on the sale of gasoline, diesel fuel,
or other motor fuel” after “sales tax”.
1976--Subsec. (d)(2). Pub. L. 94-455, 1901(a)(25), redesignated subpar. (D) as (B), and struck out subpar. (B) which related
to the taxable years that subsec. (d)(1) applied and subpar. (C) which related to
the limitations on subsec. (d)(1) where real property tax was allowable as a deduction
under the Internal Revenue Code of 1939.
Subsecs. (f), (g). Pub. L. 94-455, 1951(b)(3)(A), redesignated subsec. (g)
as (f). Former subsec. (f), which related to payments for municipal services in atomic
energy communities, was struck out.
1972--Subsec. (b)(2)(E).Pub. L. 92-580 added subpar. (E).
1964--Subsec. (a). Pub. L. 88-272, 207(a), limited the subsection to State, local and foreign real property, income,
war profits, excess profits, and unspecified taxes, on a business or activity described
in section 212, and to State and local personal property, general sales, gasoline,
diesel fuel and other motor fuel taxes.
Subsec. (b). Pub. L. 88-272, 207(a), added subsec. (b). Former subsec.
(b), which denied the deduction for certain Federal income taxes, for Federal war
profits and excess profits taxes, import duties, excise and stamp taxes, and estate,
inheritance, legacy, succession and gift taxes, local assessments against benefits
increasing property values, and certain taxes imposed by any foreign country or possession
of the United States if the taxpayer chose to benefit by section 901 relating to foreign
tax credit, and for taxes on real property to the extent that they are treated as
imposed on another taxpayer, was struck out.
Subsec. (c). Pub. L. 88-272, 207(a), substituted provisions denying the deduction for taxes assessed against
local benefits which increase property value, except for so much as is properly allocable
to maintenance or interest charges, and for real property taxes to the extent they
are treated as imposed on another taxpayer, for provisions relating to certain retail
sales taxes and gasoline taxes, the extent to which they were deductible, and to definition
of “state or local sales tax”.
Subsec. (f). Pub. L. 88-272, 207(b)(1), inserted “State” before “real property taxes”.
Subsec. (g). Pub. L. 88-272, 207(b)(2), designated existing provisions as par. (1), substituted “1451”
for “1451(f)” and added par. (2).
1958--Subsecs. (f), (g).Pub. L. 85-866, 6(a), added subsec.
(f) and redesignated former subsec. (f) as (g).
EFFECTIVE DATE OF 2017 AMENDMENT
Amendment by Pub. L. 115-97, Sec. 11042(a), effective for taxable years beginning after December 31, 2016.
EFFECTIVE DATE OF 2014 AMENDMENTS
Amendment by Pub. L. 113-295, Div. A, Sec. 105(a), effective for taxable years beginning after December 31, 2013.
Amendments by Pub. L. 113-295, Div. A, Sec. 209(c), effective as if included in the provisions of the American
Recovery and Reinvestment Tax Act of 2009 [Pub. L. 111-5, Div. B, Sec. 1008] to which they relate [Effective for purchases on or after Feb.
17, 2009 in taxable years ending after such date.
Amendments by Pub. L. 113-295, Div. A, Sec. 221(a), effective on the day of the enactment of this Act [Enacted:
Dec. 19, 2014].
Section 221(b)(2) of Pub. L. 113-295, Div. A, provided the following Savings Provision:
“(2)
SAVINGS PROVISION.—If—
“(A)
any provision amended or repealed by the amendments made by this section applied to—
“(i)
any transaction occurring before the date of the enactment of this Act [Enacted: Dec.
19, 2014],
“(ii)
any property acquired before such date of enactment, or
“(iii)
any item of income, loss, deduction, or credit taken into account before such date
of enactment, and
“(B)
the treatment of such transaction, property, or item under such provision would (without
regard to the amendments or repeals made by this section)
affect the liability for tax for periods ending after date of enactment, nothing in
the amendments or repeals made by this section shall be construed to affect the treatment
of such transaction, property, or item for purposes of determining liability for tax
for periods ending after such date of enactment.”
EFFECTIVE DATE OF 2015 AMENDMENT
Amendment by Pub. L. 114-113, Div. Q, Sec. 106(a), effective for taxable years beginning after December 31, 2014.
EFFECTIVE DATE OF 2013 AMENDMENT
Amendment by Section 205 of Pub. L. 112-240 effective for taxable years beginning after December 31, 2011.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Section 722 of Pub. L. 111-312 effective for taxable years beginning after December 31, 2010.
Amendment by Section 9015(b) of Pub. L. 111-148 effective with respect to remuneration received, and taxable years beginning, after
December 31, 2012.
EFFECTIVE DATE OF 2009 AMENDMENTS
Amendments by Div. B, Section 1008 of Pub. L. 111-5 effective for purchases on or after the date of the enactment of this Act [Enacted:
Feb. 17, 2009] in taxable years ending after such date.
EFFECTIVE DATE OF 2008 AMENDMENT
Amendment by Div. C, Section 201(a) of Pub. L. 110-343 effective for taxable years beginning after December 31, 2007.
EFFECTIVE DATE OF 2006 AMENDMENT
Amendment by Section 103(a) of Pub. L. 109-432 effective for taxable years beginning after December 31, 2005.
EFFECTIVE DATE OF 2005 AMENDMENT
Amendment by Section 403(r)(1) of Pub. L. 109-135 effective as if included in the provisions of the American Jobs Creation Act of 2004
[Pub. L. 108-357, Sec. 501]
to which it relates.
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendment by Section 501(a) of Pub. L. 108-357 effective for taxable years beginning after Dec. 31, 2003.
EFFECTIVE DATE OF 1988 AMENDMENTS
Amendment by Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
Section 1941(c) of Pub. L. 100-418 provided that: “The amendments made by this section [amending sections 164,
193, 291, 6161, 6211, 6212, 6213, 6214, 6302, 6344, 6501, 6511, 6512, 6611, 6654,
6655, 6724, 6862, 7422, and 7512 of this title, and repealing sections 280D, 4986
to 4998, 6050C, 6076, 6232, 6429, 6430, and 7241 of this title] shall apply to crude
oil removed from the premises on or after the date of the enactment of this Act [Aug.
23, 1988].”
EFFECTIVE DATE OF 1986 AMENDMENTS
Amendment by section 134 of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 1432(a)(1), (2) of Pub. L. 99-514 applicable to generation-skipping transfers (within the meaning of section 2611 of
this title) made after Oct. 22, 1986, except as otherwise provided, see section 1433
of Pub. L. 99-514, set out as an Effective Date note under section 2601 of this title.
Amendment by Pub. L. 99-499 applicable to taxable years beginning after Dec. 31, 1986, see section 516(c) of Pub. L. 99-499, set out as a note under section 26 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 not applicable with respect to obligations issued before Jan. 1, 1984, see section
475(b) of Pub. L. 98-369, set out as a note under section 33 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
For effective date of amendment by Pub. L. 97-473, see section 204(1)
of Pub. L. 97-473, set out as an Effective Date note under section 7871 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-223 applicable to periods after Feb. 29, 1980, see section 101(i) of Pub. L. 96-223, set out as an Effective Date note under section 6161 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 111(c) of Pub. L. 95-600 provided that: “The amendments made by this section [amending this section]
shall apply to taxable years beginning after December 31, 1978.”
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable with respect to taxable years beginning after Dec. 31, 1976, see sections
1901(d) and 1951(d) of Pub. L. 94-455, set out as notes under sections 2 and 72 of this title, respectively.
EFFECTIVE DATE OF 1972 AMENDMENT
Section 4(b) of Pub. L. 92-580 provided that: “The amendment made by subsection
(a) [amending this section] shall apply to taxable years ending on or after January
1, 1971.”
EFFECTIVE DATE OF 1964 AMENDMENT
Section 207(c) of Pub. L. 88-272, as amended byPub. L. 99-514, 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
“(1) General rule.--Except as provided in paragraph
(2), the amendments made by this section [enacting section 275 of this title and amending
sections 164, 535, 545, 556, 901, and 903 of this title] shall apply to taxable years
beginning after December 31, 1963.
“(2) Special taxing districts.--Section 164(c)(1) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]
(as amended by subsection (a)) shall not prevent the deduction under section 164 of
such Code (as so amended) of taxes levied by a special taxing district which is described
in section 164(b)(5) of such Code
(as in effect for a taxable year ending on December 31, 1963) and which was in existence
on December 31, 1963, for the purpose of retiring indebtedness existing on such date.”
EFFECTIVE DATE OF 1958 AMENDMENT
Section 6(b) of Pub. L. 85-866 provided that: “The amendments made by subsection (a) [amending this section]
shall apply with respect to taxable years beginning after December 31, 1957.”
TEMPORARY EMPLOYEE PAYROLL TAX CUT
Section 601 of Pub. L. 111-312, as amended by Pub. L. 112-78, Sec. 101, and Pub. L. 112-96, Sec. 1001, provided that:
“SEC. 601. TEMPORARY EMPLOYEE PAYROLL TAX CUT.
“(a) IN GENERAL.—Notwithstanding any other provision of law,—
“(1) with respect to any taxable year which begins in the payroll tax holiday
period, the rate of tax under section 1401(a) of the Internal Revenue Code of 1986 shall be 10.40 percent, and
“(2) with respect to remuneration received during the payroll tax holiday period,
the rate of tax under 3101(a)
of such Code shall be 4.2 percent (including for purposes of determining the applicable
percentage under sections 3201(a) and 3211(a)(1) of such Code).
“(b) COORDINATION WITH DEDUCTIONS FOR EMPLOYMENT TAXES.—
“(1) DEDUCTION IN COMPUTING NET EARNINGS FROM SELF-EMPLOYMENT.—For purposes
of applying section 1402(a)(12) of the Internal Revenue Code of 1986, the rate of tax imposed by subsection 1401(a)
of such Code shall be determined without regard to the reduction in such rate under
this section.
“(2) INDIVIDUAL DEDUCTION.—In the case of the taxes imposed by section
1401 of such Code for any taxable year which begins in the payroll tax holiday period,
the deduction under section 164(f) of such Code with respect to such taxes shall be
equal to the sum of—
“(A) 59.6 percent of the portion of such taxes attributable to the tax imposed
by section 1401(a) of such Code
(determined after the application of this section), plus
“(B) one-half of the portion of such taxes attributable to the tax imposed by
section 1401(b) of such Code.
“(c) PAYROLL TAX HOLIDAY PERIOD.—The term ‘payroll tax holiday period'
means calendar years 2011 and 2012.
“(d) EMPLOYER NOTIFICATION.—The Secretary of the Treasury shall notify
employers of the payroll tax holiday period in any manner the Secretary deems appropriate.
“(e) TRANSFERS OF FUNDS.—
“(1) TRANSFERS TO FEDERAL OLD-AGE AND SURVIVORS INSURANCE TRUST FUND.—There
are hereby appropriated to the Federal Old-Age and Survivors Trust Fund and the Federal
Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401)
amounts equal to the reduction in revenues to the Treasury by reason of the application
of subsection (a). Amounts appropriated by the preceding sentence shall be transferred
from the general fund at such times and in such manner as to replicate to the extent
possible the transfers which would have occurred to such Trust Fund had such amendments
not been enacted.
“(2) TRANSFERS TO SOCIAL SECURITY EQUIVALENT BENEFIT ACCOUNT.—There are
hereby appropriated to the Social Security Equivalent Benefit Account established
under section 15A(a)
of the Railroad Retirement Act of 1974 (45 U.S.C. 231n-1(a)) amounts equal to the reduction in revenues to the Treasury by reason of the application
of subsection (a)(2). Amounts appropriated by the preceding sentence shall be transferred
from the general fund at such times and in such manner as to replicate to the extent
possible the transfers which would have occurred to such Account had such amendments
not been enacted.
“(3) COORDINATION WITH OTHER FEDERAL LAWS.—For purposes of applying any
provision of Federal law other than the provisions of the Internal Revenue Code of 1986, the rate of tax in effect under section 3101(a) of such Code shall be determined
without regard to the reduction in such rate under this section.”
Pub. L. 112-96, Sec. 1001(b), struck subsec. (f) and (g)
of Sec. 601 of Pub. L. 111-312, as amended by Pub. L. 112-78, Sec. 101, effective for remuneration received, and taxable years beginning, after December
31, 2011. Before being struck, Sec. 601(f) and (g) read as follows:
“(f)
SPECIAL RULES FOR 2012.—
“(1)
LIMITATION ON SELF-EMPLOYMENT INCOME.—In the case of any taxable year beginning
in 2012, subsection (a)(1) shall only apply with respect to so much of the taxpayer's
self-employment income (as defined in section 1402(b) of the Internal Revenue Code of 1986) as does not exceed the excess (if any) of—
“(A)
$18,350, over
“(B)
the amount of wages and compensation received during the portion of the payroll tax
holiday period occurring during 2012 subject to tax under section 3101(a) of such
Code or section 3201(a) of such Code.
“(2)
COORDINATION WITH DEDUCTION FOR EMPLOYMENT TAXES.—In the case of a taxable year
beginning in 2012, subparagraph (A) of subsection
(b)(2) shall be applied as if it read as follows:
“ ‘(A)
the sum of—
“(i)
59.6 percent of the portion of such taxes attributable to the tax imposed by section
1401(a) of such Code (determined after the application of this section) on so much
of self-employment income (as defined in section 1402(b) of such Code) as does not
exceed the amount of self-employment income described in paragraph (1), plus
“(ii)
one-half of the portion of such taxes attributable to the tax imposed by section 1401(a)
of such Code (determined without regard to this section) on self-employment income
(as so defined) in excess of such amount, plus'.
“(g)
RECAPTURE OF EXCESS BENEFIT.—
“(1)
IN GENERAL.—There is hereby imposed on the income of every individual a tax
equal to 2 percent of the sum of wages (within the meaning of section 3121(a)(1) of the Internal Revenue Code of 1986) and compensation (to which section 3201(a)
of such Code applies) received during the period beginning January 1, 2012, and ending
February 29, 2012, to the extent the amount of such sum exceeds $18,350.
“(2)
REGULATIONS.—The Secretary of the Treasury or the Secretary's delegate shall
prescribe such regulations or other guidance as may be necessary or appropriate to
carry out this subsection, including guidance for payment by the employee of the tax
imposed by paragraph
(1).”
SAVINGS PROVISION
Section 1951(b)(3)(B) of Pub. L. 94-455 provided that: “Notwithstanding subparagraph (A) [amending this section], any
amount paid or accrued in a taxable year beginning after December 31, 1976, to the
Atomic Energy Commission or its successors for municipal-type services shall be allowed
as a deduction under section 164 if such amount would have been deductible by reason
of section 164(f) (as in effect for a taxable year ending on December 31, 1976) and
if the amount is paid or accrued with respect to real property in a community (within
the meaning of section 21(b) of the Atomic Energy Community Act of 1955 (42 U.S.C. 2304(b))) in which the Commission on December 31, 1976, was rendering municipal-type services
for which it received compensation from the owners of property within such community.”
