Final answer:
The benefit of deducting state income tax from federal income tax computations applies to taxpayers whose total itemized deductions exceed their standard deduction.
Step-by-step explanation:
Those who benefit from deducting the amount paid in state income tax from their income for the purposes of computing federal income tax are B. Those whose total itemized deductions (including state income tax) is above their standard deduction. To clarify, taxpayers have the option to itemize deductions or take the standard deduction on their federal income tax return. Itemizing deductions implies that a taxpayer will list all allowable deductions individually, and this can include state income tax among others, such as mortgage interest, medical expenses, and charitable contributions. If the sum of all itemized deductions exceeds the standard deduction, the taxpayer can lower their taxable income further by itemizing. However, this is only beneficial if the total of their itemized deductions is greater than the standard deduction provided by the IRS.