State taxes paid are generally classified under state and local tax (SALT) deductions on your federal return, commonly itemized on Schedule A if you are eligible. For business entities, these taxes may be recorded as an operating expense in the cost of doing business. It is important to adhere to current IRS guidelines and limitations, including any caps imposed by recent tax reforms. Accurate recordkeeping and consultation with a qualified tax professional are essential for proper categorization and compliance. For further clarity, please note that these guidelines are general in nature and individual circumstances may necessitate professional advice.