You can deduct the following taxes:

• Real estate and personal property taxes on farm business assets.
• Social security and Medicare taxes you paid to match what you are required to withhold from farm employees' wages.
• Federal unemployment tax.
• Federal highway use tax.
• Contributions to state unemployment insurance fund or disability benefit fund if they are considered taxes under state law.

Do not deduct the following taxes:

• Federal income taxes, including your self-employment tax. However, you may deduct one-half of your self-employment tax on Form 1040.
• Estate and gift taxes.
• Taxes assessed for improvements, such as paving and sewers.
• Taxes on your home or personal use property.
• State and local sales taxes on property purchased for use in your farming business. Instead, treat these taxes as part of the cost of the property.
• Other taxes not related to your farming business.