Payments you make to the IRS are, as a rule, not tax deductible. Federal income tax, Social Security and Medicare withheld from your paycheck, IRS penalties, and interest on personal back taxes all stay on your side of the ledger with no offsetting write-off. A few narrow exceptions exist, and they’re worth knowing because they’re the only places this question has a “yes” answer.
Federal Income Tax and Payroll Withholding
Federal law directly bars a deduction for federal income taxes. It doesn’t matter how the money reaches the Treasury: withholding from wages, quarterly estimated payments, or the balance due you send with your Form 1040 all receive the same treatment.1Office of the Law Revision Counsel. 26 U.S. Code 275 – Certain Taxes
The same statute blocks a deduction for the Social Security and Medicare taxes withheld from employee wages. Federal estate and gift taxes and federal excise taxes are listed alongside them. If you’re a wage earner, essentially everything your employer sends to the IRS on your behalf stays non-deductible.
One related category: taxes you pay when buying or selling property, such as transfer taxes, aren’t deductible either. They get added to your cost basis or subtracted from the amount you realized on the sale, which affects gain or loss rather than taxable income directly.2Office of the Law Revision Counsel. 26 U.S. Code 164 – Taxes
IRS Penalties and Interest on Back Taxes
Penalties the IRS assesses are never deductible. That includes the failure-to-file penalty, the failure-to-pay penalty, and accuracy-related penalties for understating income or overstating deductions. The rule reaches any fine or penalty paid to a government for violating a law, civil or criminal, federal, state, or local.3eCFR. 26 CFR 1.162-21 – Denial of Deduction for Certain Fines, Penalties, and Other Amounts The point is for the penalty to carry its full weight; a deduction would soften the blow Congress intended.
Interest the IRS charges on a late balance follows a different test. If the tax debt relates to personal items — wages, investment income, personal deductions you got wrong — the interest is personal interest, and personal interest is not deductible.4Office of the Law Revision Counsel. 26 U.S. Code 163 – Interest
Interest on a tax debt that comes from a trade or business is different. It’s excluded from the personal interest ban and can be claimed as a business expense. A sole proprietor who understated Schedule C income, for example, can generally deduct the IRS interest on that portion as a business cost.4Office of the Law Revision Counsel. 26 U.S. Code 163 – Interest
A common workaround doesn’t work: borrowing against your home equity to pay a tax bill and deducting the loan interest. Home equity loan interest is only deductible when the proceeds buy, build, or substantially improve the home securing the loan. Using the money for a tax debt doesn’t qualify.5Internal Revenue Service. Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses)
Self-Employment Tax: Half Is Deductible
This is the main exception for anyone who files a Schedule C, a Schedule F, or a partnership return with self-employment earnings. You can deduct one-half of the self-employment tax you pay.2Office of the Law Revision Counsel. 26 U.S. Code 164 – Taxes The deduction mirrors the employer-side payroll tax that a business would normally write off, so self-employed people aren’t shouldering a tax their incorporated counterparts can expense.
You take it as an adjustment to gross income, not an itemized deduction. That means you get it whether you itemize or claim the standard deduction. It reduces your adjusted gross income, which can also affect other AGI-sensitive calculations. It does not reduce the self-employment tax itself or your net earnings from self-employment.6Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
Employees asking the parallel question for their FICA withholding don’t get the same break. The half-deduction is only for self-employment tax.
State and Local Taxes You Pay
Payments to the IRS aren’t deductible, but payments to state and local tax authorities often are. If you itemize on Schedule A, you can deduct state and local income taxes, real property taxes, and personal property taxes. You can swap in state and local general sales taxes in place of income taxes, but not both in the same year.7Internal Revenue Service. Topic No. 503 – Deductible Taxes
These deductions are subject to the SALT cap. After the One Big Beautiful Bill was signed into law in July 2025, the base cap for 2026 rose to $40,000 for most filers and $20,000 for those married filing separately, with inflation adjustments and a phase-down for higher-income taxpayers that cannot push the cap below a $10,000 floor ($5,000 for married filing separately).7Internal Revenue Service. Topic No. 503 – Deductible Taxes The deduction only helps if your total itemized deductions beat the standard deduction for your filing status.
Foreign Income Taxes
Taxes you pay to a foreign government aren’t IRS payments, but they come up in the same conversation. You can either deduct them on Schedule A or claim a foreign tax credit on Form 1116.8Internal Revenue Service. Foreign Tax Credit – Choosing to Take Credit or Deduction
The credit usually wins. It cuts your tax bill dollar for dollar, works alongside the standard deduction, and lets you carry excess credits to other tax years. The choice is all-or-nothing for the year: you can’t credit some foreign taxes and deduct others. The IRS suggests running the numbers both ways.8Internal Revenue Service. Foreign Tax Credit – Choosing to Take Credit or Deduction
If You Get a State Tax Refund Later
One flip side worth knowing. If you deducted state or local taxes last year and later receive a refund of those taxes, the tax benefit rule may require you to report that refund as income on your federal return.9Office of the Law Revision Counsel. 26 U.S. Code 111 – Recovery of Tax Benefit Items
You only include the portion that actually reduced your tax in the earlier year. If you took the standard deduction, the refund isn’t taxable at all. If the SALT cap blocked part of your deduction, the refund is only taxable to the extent the deduction gave you a benefit. The Form 1099-G your state sends will show the full refund amount, but the taxable share may be smaller.