Is business personal property tax deductible?
Where the tax goes on the federal return, how it differs from the cost of the equipment, and why the SALT cap does not apply.
Summary
Our answer: yes. Personal property tax paid on business assets is deductible as a business expense: on Schedule C, line 23 (taxes and licenses) for a sole proprietor or single-member LLC, and on Form 1120, line 17 for a corporation. Section 164(b)(6) says the individual cap on state and local taxes ($40,000 for 2025, $40,400 for 2026) does not apply to taxes paid in carrying on a trade or business. The equipment itself is not deducted this way; it is depreciated or expensed separately.
Business personal property tax: deductible as a business tax (IRC 164(a)(2)); Schedule C line 23 or Form 1120 line 17; outside the SALT cap when paid in a trade or business (164(b)(6)).
| Code section | IRC 164(a)(2)State and local personal property taxes. |
|---|---|
| Sole proprietor or single-member LLC | Schedule C, line 23Real estate and personal property taxes on business assets (2025 instructions). |
| Corporation | Form 1120, line 17Taxes and licenses paid or accrued. |
| SALT cap | Does not apply to business taxes164(b)(6); cap $40,000 for 2025, $40,400 for 2026 for individuals' itemized taxes. |
| Not the same | Buying the equipmentDepreciation or expensing, not the tax line. |
Our verdict
Deduct it as a business tax on Schedule C line 23 or Form 1120 line 17. It is not limited by the SALT cap, so a sole proprietor keeps the full deduction. Keep the county bill and payment record with your books.
Who this page is for, and who it is not for
For: sole proprietors, single-member LLC owners and small corporations that paid a business personal property tax bill. Not for: personal property tax on a personal car or household items, which follows the itemized-deduction rules; partnerships and S corporations, which deduct at the entity level on their own returns.
Where it goes, by type of business
The deduction follows the return that carries the business.
| Business | Return | Line |
|---|---|---|
| Sole proprietor or single-member LLC | Schedule C | Line 23, taxes and licenses |
| C corporation | Form 1120 | Line 17, taxes and licenses |
Sources: 2025 Instructions for Schedule C; Instructions for Form 1120; IRC 164.
Next steps
Common questions
Where do I deduct business personal property tax on Schedule C?
Line 23, taxes and licenses. The 2025 Schedule C instructions list real estate and personal property taxes on business assets among the items deductible on that line.
Does the $40,000 SALT cap apply?
Not to taxes paid in carrying on a trade or business. Section 164(b)(6) excludes them from the limitation, which applies to individuals' itemized state and local taxes ($40,000 for 2025, $40,400 for 2026).
Prepare the return that creates the bill
Texas, Fairfax County and Multnomah renewals: the $79 packet prepares the return. The deduction itself goes on your federal return.
Open checkerRelated guides
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A practical explanation for small businesses preparing a simple asset-register packet.
Texas business personal property exemption: $125,000 per location since 2026
What the HB 9 exemption changes for a small Texas business, what you still file by April 15, and when a full rendition is still required.
Business personal property asset register template
Template columns and example rows for a simple local business personal property packet.
Official sources for this guide
Last reviewed: .