U.S. · Tax forms
Form 1041 line 11, taxes.
Which taxes count, which do not, and how the 2025 state and local tax cap works for an estate or trust.
Line 11 (“Taxes”) is where an estate or trust enters deductible taxes it paid or incurred that are not deductible elsewhere on Form 1041. For 2025 the instructions cap state and local taxes at $40,000, reduced when adjusted gross income is over $500,000, and give a worksheet for it.
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Result
Deductible and non-deductible taxes, 2025 instructions
| Tax | Meaning | What the IRS says |
|---|---|---|
| State and local income taxes | Deductible on line 11 | Deductible unless you elect to deduct state and local general sales taxes. You cannot deduct both |
| State and local general sales taxes | Deductible by election | Can be elected instead of income taxes. An estate or trust cannot use the Optional State Sales Tax Tables from the Schedule A instructions |
| State and local real property taxes | Deductible on line 11 | Listed as deductible. The deduction for foreign real property taxes is no longer allowed |
| State and local personal property taxes | Deductible on line 11 | Listed as deductible taxes |
| Foreign or U.S. territory income taxes | Deduction or credit | Deductible, but you may prefer a credit; see the Schedule G, Part I, line 2a instructions |
| GST tax on income distributions | Deductible on line 11 | The generation-skipping transfer tax imposed on income distributions is listed |
| Federal income taxes | Not deductible | Listed under taxes not to deduct |
| Estate, inheritance, legacy, succession, gift taxes | Not deductible | Listed under taxes not to deduct |
| Federal duties and excise taxes | Not deductible | Listed under taxes not to deduct |
| Trade or business taxes | Not capped | The cap does not apply to state and local taxes paid or accrued in carrying on a trade or business or for the production of income |
The 2025 state and local tax cap
The instructions state a maximum deduction of $40,000 for the total of state and local income taxes (or general sales taxes if elected), real estate taxes and personal property taxes. The limit does not apply to foreign income taxes or to state and local taxes paid or accrued in carrying on a trade or business or for the production of income. If the amount of state and local taxes is $10,000 or less you do not have to complete the worksheet.
How the worksheet works
The State and Local Tax Deduction Worksheet starts with your state and local taxes (entering $40,000 if they are more) and the estate’s or trust’s adjusted gross income. If AGI is not over $500,000 the amount from the first line is the deduction. If it is over, you subtract $500,000 from AGI, multiply by 30%, subtract the result from $40,000, take the larger of that and $10,000, and then the smaller of that and your taxes.
Where the amount goes
Line 11 is added with lines 10 through 15b on line 16, which comes off total income on line 9 to give adjusted total income on line 17. Taxes that belong on Schedule C, E or F go there instead.
Worked example
The Alvarez Family Trust (made up) is a non-grantor trust with adjusted gross income of $600,000 and $45,000 of state and local taxes. Worksheet line 1 is $40,000 (the cap). AGI is $100,000 over $500,000, so line 5 is 30% of that, $30,000, and line 6 is $40,000 minus $30,000, $10,000. The larger of $10,000 and $10,000 is $10,000, and the smaller of $40,000 and $10,000 is $10,000, which goes on line 11. Names and figures are made up.
More line pages in this set
Related lines: Form 1041 Line 10, Form 1041 Line 14, Form 1041 Line 15a.
Sources
- Instructions for Form 1041 and Schedules A, B, G, J, and K-1 (2025): the line-by-line instructions on this page. Page last reviewed or updated April 30, 2026. Read November 2, 2026.
- Form 1041 (2025), U.S. Income Tax Return for Estates and Trusts: the printed line wording and arithmetic on the form (Form 1041 (2025), created 10/28/25). Read November 2, 2026.
Tax year 2025 forms and instructions: Form 1041 (2025) and its 2025 instructions. Line numbers and labels were read from the IRS PDF and instructions on the date read and can change between tax years, so check them against the form for your year. Names in worked examples are made up.
Frequently asked questions
What goes on Form 1041 line 11?
Deductible taxes paid or incurred during the tax year that are not deductible elsewhere on Form 1041, such as state and local income or general sales taxes, real and personal property taxes, foreign or U.S. territory income taxes and GST tax on income distributions.
What is the state and local tax cap for a trust in 2025?
The 2025 instructions state a maximum deduction of $40,000 for the total of state and local income (or sales), real estate and personal property taxes, reduced by 30% of the amount by which adjusted gross income exceeds $500,000, with a $10,000 floor in the worksheet.
Can an estate deduct both income and sales taxes?
No. It can deduct state and local income taxes or elect to deduct general sales taxes, not both.
Are federal income taxes deductible on line 11?
No. The instructions list federal income taxes, estate, inheritance, legacy, succession and gift taxes, and federal duties and excise taxes as taxes not to deduct.
Do I need the worksheet?
Not if state and local taxes are $10,000 or less. Otherwise complete the State and Local Tax Deduction Worksheet to see whether the deduction is limited.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. A CPA or an enrolled agent can confirm what a line means for your return. Everything runs in your browser; nothing you enter is sent anywhere.