26 U.S.C. § 164
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:
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.
For purposes of this section-
The term "personal property tax" means an ad valorem tax which is imposed on an annual basis in respect of personal property.
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.
A foreign tax includes only a tax imposed by the authority of a foreign country.
The GST tax imposed on income distributions is-
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.
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.
For purposes of subsection (a)-
At the election of the taxpayer for the taxable year, subsection (a) shall be applied-
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.
In the case of items of food, clothing, medical supplies, and motor vehicles-
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.
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-
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.
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.
At the election of the taxpayer for the taxable year, the amount of the deduction allowed under this paragraph for such year shall be-
The tables prescribed under clause (i)-
In the case of an individual and a taxable year beginning after December 31, 2017, and before January 1, 2026-
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.
No deduction shall be allowed for the following taxes:
For purposes of subsection (a), if real property is sold during any real property tax year, then-
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.
shall be treated as having accrued on the date of the sale.
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-
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.
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.
26 U.S.C. § 164
EDITORIAL NOTES
REFERENCES IN TEXTSection 2604, referred to in subsec. (b)(4)(A)(ii), was repealed by Pub. L. 113-295, div. A, title II, §221(a)(95)(B)(i), Dec. 19, 2014, 128 Stat. 4051, effective Dec. 19, 2014.
AMENDMENTS2022-Subsec. (b)(6). Pub. L. 117-169, §13903(a)(1), amended par. (6), "as amended by section 13904", by substituting "2025" for "2026" in heading and "2026" for "2027" in introductory provisions. See note below. Pub. L. 117-169, §13904(b)(1), substituted "2026" for "2025" in heading and "2027" for "2026" in introductory provisions.2017-Subsec. (b)(6). Pub. L. 115-97 added par. (6).2015-Subsec. (b)(5)(I). Pub. L. 114-113 struck out subpar. (I). Text read as follows: "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, §221(a) (12)(D), struck out par. (5) which read as follows: "The environmental tax imposed by section 59A."Subsec. (a)(6). Pub. L. 113-295, §221(a) (26), struck out par. (6) which read as follows: "Qualified motor vehicle taxes."Subsec. (b)(4)(A)(ii). Pub. L. 113-295, §221(a) (95)(B)(ii), inserted "(as in effect before its repeal)" after "section 2604".Subsec. (b)(5)(I). Pub. L. 113-295, §105(a), substituted "January 1, 2015" for "January 1, 2014".Subsec. (b)(6). Pub. L. 113-295, §221(a) (26), struck out par. (6) which related to qualified motor vehicle taxes. Subsec. (b)(6)(E) to (G). Pub. L. 113-295, §209(c), redesignated subpars. (F) and (G) as (E) and (F), respectively, substituted "Subsection (a)(6)" for "This paragraph" in subpars. (E) and (F), and struck out former subpar. (E). Prior to amendment, text of former subpar. (E) read as follows: "The last sentence of subsection (a) shall not apply to any qualified motor vehicle taxes."2013-Subsec. (b)(5)(I). Pub. L. 112-240 substituted "January 1, 2014" for "January 1, 2012". 2010-Subsec. (b)(5)(I). Pub. L. 111-312 substituted "January 1, 2012" for "January 1, 2010".Subsec. (f)(1). Pub. L. 111-148, which directed the insertion of "(other than the taxes imposed by section 1401(b)(2))" after "section 1401)" in subsec. (f), was executed by making the insertion after "section 1401" in subsec. (f)(1), to reflect the probable intent of Congress.2009-Subsec. (a)(6). Pub. L. 111-5, §1008(a), added par. (6).Subsec. (b)(6). Pub. L. 111-5, §1008(b), added par. (6). 2008-Subsec. (b)(5)(I). Pub. L. 110-343 substituted "January 1, 2010" for "January 1, 2008". 2006-Subsec. (b)(5)(I). Pub. L. 109-432 substituted "2008" for "2006".2005-Subsec. (b)(5)(A). Pub. L. 109-135 reenacted heading without change and amended text generally. Prior to amendment, text read as follows:"(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. (b)(5). Pub. L. 108-357 added par. (5).1996-Subsec. (a)(4), (5). Pub. L. 104-188 added pars. (4) and (5) and struck out former pars. (4) and (5) which 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). Pub. L. 98-21 added subsec. (f). Former subsec. (f) redesignated (g).Subsec. (f)(3). Pub. L. 97-473 added par. (3).Subsec. (g). Pub. L. 98-21 redesignated subsec. (f) as (g).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).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2022 AMENDMENT Pub. L. 117-169, §13903(a)(2), Aug. 16, 2022, 136 Stat. 2014, provided that: "The amendments made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2022." Pub. L. 117-169, §13904(b)(2), Aug. 16, 2022, 136 Stat. 2015, provided that: "The amendments made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2022."
EFFECTIVE DATE OF 2017 AMENDMENT Pub. L. 115-97, §11042(b), Dec. 22, 2017, 131 Stat. 2086, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2016."
EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114-113, div. Q, title I, §106(b), Dec. 18, 2015, 129 Stat. 3046, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2014."
EFFECTIVE DATE OF 2014 AMENDMENT Pub. L. 113-295, div. A, title I, §105(b), Dec. 19, 2014, 128 Stat. 4013, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2013."Amendment by section 209(c) of Pub. L. 113-295 effective as if included in the provisions of the American Recovery and Reinvestment Tax Act of 2009, Pub. L. 111-5, div. B, title I, to which such amendment relates, see section 209(k) of Pub. L. 113-295, set out as a note under section 24 of this title.Amendment by section 221(a)(12)(D), (26), (95)(B)(ii) of Pub. L. 113-295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113-295, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 2013 AMENDMENT Pub. L. 112-240, §205(b), Jan. 2, 2013, 126 Stat. 2323, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2011."
EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111-312, §722(b), Dec. 17, 2010, 124 Stat. 3316, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2009." Pub. L. 111-148, §9015(c), Mar. 23, 2010, 124 Stat. 872, provided that: "The amendments made by this section [amending this section and sections 1401, 1402, 3101, and 3102 of this title] shall apply with respect to remuneration received, and taxable years beginning, after December 31, 2012."
EFFECTIVE DATE OF 2009 AMENDMENT Amendment by Pub. L. 111-5 applicable to purchases on or after Feb. 17, 2009, in taxable years ending after such date, see section 1008(e) of Pub. L. 111-5, set out as a note under section 56 of this title.
EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110-343, div. C, title II, §201(b), Oct. 3, 2008, 122 Stat. 3864, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2007."
EFFECTIVE DATE OF 2006 AMENDMENT Pub. L. 109-432, div. A, title I, §103(b), Dec. 20, 2006, 120 Stat. 2934, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2005."
EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109-135 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108-357, to which such amendment relates, see section 403(nn) of Pub. L. 109-135, set out as a note under section 26 of this title.
EFFECTIVE DATE OF 2004 AMENDMENT Pub. L. 108-357, §501(b), Oct. 22, 2004, 118 Stat. 1521, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2003."
EFFECTIVE DATE OF 1988 AMENDMENT 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.Pub. L. 100-418, title I, §1941(c), Aug. 23, 1988, 102 Stat. 1324, provided that: "The amendments made by this section [amending this section and sections 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 AMENDMENT 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 Amendment by Pub. L. 98-21 applicable to taxable years beginning after Dec. 31, 1989, see section 124(d)(2) of Pub. L. 98-21, set out as a note under section 1401 of this title.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 Pub. L. 95-600, title I, §111(c), Nov. 6, 1978, 92 Stat. 2777, 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 Pub. L. 92-580, §4(b), Oct. 27, 1972, 86 Stat. 1277, 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 Pub. L. 88-272, title II, §207(c), Feb. 26, 1964, 78 Stat. 43, as amended by Pub. 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 this section and sections 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 Pub. L. 85-866, §6(b), Sept. 2, 1958, 72 Stat. 1608, provided that: "The amendments made by subsection (a) [amending this section] shall apply with respect to taxable years beginning after December 31, 1957."
SAVINGS PROVISIONPub. L. 94-455, title XIX, §1951(b)(3)(B), Oct. 4, 1976, 90 Stat. 1837, 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."
- Internal Revenue Code of 1986
- The term "Internal Revenue Code of 1986" means this title, and the term "Internal Revenue Code of 1939" means the Internal Revenue Code enacted February 10, 1939, as amended.
- Secretary
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- State
- The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
- corporation
- The term "corporation" includes associations, joint-stock companies, and insurance companies.
- shareholder
- The term "shareholder" includes a member in an association, joint-stock company, or insurance company.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
- taxpayer
- The term "taxpayer" means any person subject to any internal revenue tax.
- trade or business
- The term "trade or business" includes the performance of the functions of a public office.