It is my understanding, and hopefully I am correct, that you can deduct state income tax paid when itemizing deductions on Schedule A. However, there are approximately nine states that do not levy a state income tax and the taxpayer, if itemizing on Schedule A, can deduct state and local sales tax on Schedule A in certain years. However, that deduction has expired and has not yet been approved for tax year 2012.
I live in TN and we do not have a state income tax per se and in the few years that I did itemize and could deduct state and local sales tax, I found it much better to take the amount based on actual receipts rather than the standard amount alloted in the IRS tables. I charge virtually all of my purchases to a credit card, paying it in full each month, and just keep tabs on my monthly batches of receipts as to how much was paid for the state and local sales tax.