For tax years beginning in 2004 and 2005, the American Jobs Creation Act of 2004, recently passed by Congress, allows taxpayers to elect to take state and local general sales and use taxes as an itemized deduction on their federal income tax returns for those years. However, a taxpayer who makes this election will not be able to take an itemized deduction for state and local income taxes for the same year.

Taxpayers who make this election may either deduct their actual sales and use taxes, or use tables published by the Internal Revenue Service to determine the base amount that they can deduct. They would then add to the amount from those tables the actual amount of their sales tax for motor vehicles, boats and other items specified by the IRS.

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