The American Jobs Creation Act of 2004 permits taxpayers to deduct either their state and local income taxes or their state and local sales taxes as an itemized deduction for 2004 and 2005.

As usual with itemized deductions, taxpayers will have to determine if they are better off with the standard deduction or the itemized deduction. Now, however, taxpayers have a couple more choices. They will have to determine if they are better off with the sales tax deduction or the income tax deduction, and, for the sales tax deduction, whether they are better off using actual sales taxes paid for the year or the Internal Revenue Service tables plus actual taxes for certain big-ticket items such as motor vehicles and mobile homes.

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