U.S. · Tax forms
Schedule E line 16, taxes.
One word on the form, and what the instructions add to it.
Line 16 is simply labeled “Taxes”, one amount per property. The instructions list taxes among the ordinary and necessary expenses you can deduct, and say to include taxes withheld by the producer on line 16 for royalties such as oil and gas. They do not give a longer list of qualifying taxes.
Look up a line item
Result
What the instructions say about line 16 taxes (2025)
| Item | Meaning | What the IRS says |
|---|---|---|
| Line 16 | Taxes | The form label, in each property column |
| Lines 5 to 21 | General rule | You can deduct all ordinary and necessary expenses, such as taxes, interest, repairs, insurance, management fees, agents’ commissions and depreciation |
| Line 4 | Royalty income | Enter the gross amount even if state or local taxes were withheld from oil or gas payments; include taxes withheld by the producer on line 16 |
| Line 20 | Total expenses | Line 16 is part of the sum of lines 5 through 19 |
| Part of a home | Renting out only part | Deduct the part of your expenses that applies to the rented part |
| Capital items | Not deductible | Do not deduct amounts paid for capital investments or capital improvements |
| Line 23 | Totals across properties | Lines 23a to 23e total only some lines (3, 4, 12, 18 and 20); line 16 is not totalled separately |
The royalty withholding rule
For royalties, the gross amount goes on line 4 even if state or local taxes were withheld from the payments. The matching tax is then claimed as an expense: the instructions say to include taxes withheld by the producer on line 16. That keeps the income at its gross figure and shows the tax as a deduction.
What the instructions do not list
Unlike the Schedule F instructions, the Schedule E instructions have no paragraph titled “Line 16” and no itemized list of qualifying taxes. The only sentences are the general expense rule and the royalty withholding note above. For a specific tax, a CPA or enrolled agent can say whether it belongs on this line.
Part-use properties
If you rent out only part of a property, the instructions say to deduct the part of your expenses that applies to the rented part. Expenses of the part you use yourself are not rental expenses.
Worked example
Kim owns a duplex and pays $3,600 of property tax on the whole building, renting out one half. Following the “rented part” rule, the rental share is about $1,800, which Kim enters on line 16. Names and figures are made up, and the right split depends on the facts.
More line pages in this set
Related lines: Schedule E Line 18, Schedule E Line 19.
Sources
- Instructions for Schedule E (Form 1040) (2025): The general instructions for lines 5 through 21 and the line 4 royalty note. Page last reviewed or updated April 30, 2026. Read November 2, 2026.
- Schedule E (Form 1040) (2025): The printed line 16, line 20 and line 23 wording. Read November 2, 2026.
Tax year 2025 instructions (page last reviewed or updated April 30, 2026). The line labels were read from the Schedule E (Form 1040) PDF the IRS had posted on the date read, which is the 2025 edition; line numbers can shift between years, so check them against the form for your tax year. Names and figures in worked examples are made up.
Frequently asked questions
What is Schedule E line 16?
The Taxes line for each rental or royalty property.
Do the instructions list which taxes qualify?
No. The Schedule E instructions have no separate line 16 paragraph; they say only that taxes are among the ordinary and necessary expenses you can deduct.
Where do taxes withheld from royalties go?
The instructions say to enter the gross royalties on line 4 and include taxes withheld by the producer on line 16.
What if I rent out only part of my property?
The instructions say to deduct the part of your expenses that applies to the rented part.
Does line 16 feed into total expenses?
Yes. Line 20 adds lines 5 through 19, so the taxes on line 16 are part of total expenses.
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.