Some states in the United States such as Washington state disguise income taxes as payroll taxes. Do payroll taxes qualify for State and Local Tax (SALT) deductions?

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Many state payroll taxes are considered state income taxes for the purposes of the federal itemized deductions. See 2020 Form 1040 Schedule A instructions for line 5a:

If you don't elect to deduct general sales taxes, include on line 5a the state and local income taxes listed next.


  • Mandatory contributions you made to the California, New Jersey, or New York Nonoccupational Disability Benefit Fund, Rhode Island Temporary Disability Benefit Fund, or Washington State Supplemental Workmen's Compensation Fund.

  • Mandatory contributions to the Alaska, California, New Jersey, or Pennsylvania state unemployment fund.

  • Mandatory contributions to state family leave programs, such as the New Jersey Family Leave Insurance (FLI) program and the California Paid Family Leave program.

This doesn't address Washington state's long-term care tax specifically, probably because that is a new tax that only starts in 2022, but based on how the deduction applies to similar existing taxes, it would seem like yes, it should count as state income taxes for the purposes of the federal itemized deductions.

  • Thanks for the information! I wonder whether the Washington state's long-term care tax will be added to it, as one could argue that this isn't a mandatory contribution since one can opt out (but it certainly is a mandatory contributions for some, e.g. new WA residents or taxpaypayers turning 18 after ~2022). Nov 1, 2021 at 4:01
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    @FranckDernoncourt: But for California SDI, it's also true that in some employers, employees can contribute to VPDI instead of SDI. Nevertheless, California SDI is still considered state income tax (though interestingly VPDI is not) for the purposes of this deduction. See Revenue Ruling 81-194.
    – user102008
    Nov 1, 2021 at 6:40
  • Thanks, good point! Nov 1, 2021 at 6:47

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