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State sales tax deduction will be extended for 2 years

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moneyWASHINGTON — The Washington state sales tax deduction will be extended for two years, Sen. Maria Cantwell, D-Wash., announced Tuesday. It was included in the ‘fiscal cliff’ measure that passed Congress Tuesday night and which President Obama said he will sign into law.

Without an extension, Washington residents would no longer be able to claim the deduction — and save money — when they file their 2012 federal tax returns.  Residents of other states that have state income taxes are allowed to deduct their state inoome taxes on their federal income tax returns, putting Washington and other states without state income taxes at a disadvantage.

Nearly 850,000 Washington residents took advantage of the state and local sales tax deduction in 2009, the most recent year of published IRS data, for an average tax savings of nearly $500 per filer, Cantwell noted.

She said the bill also would extend the Returning Heroes and Wounded Warriors Work Opportunity Tax Credit, the New Markets Tax Credit, the Low-Income Housing Tax Credit, the Research and Development Tax Credit and tax credits for clean energy production.

“This bill protects middle-class families from income taxes going up, and provides certainty for Washington state taxpayers and businesses by extending the state sales tax deduction for two years,” Cantwell said. “Extending the state sales tax deduction puts an average of $500 back in the pockets of 850,000 Washington tax filers.”

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  • Michellynn

    The funny thing is it says us in WA would be at a disadvantage without the sales tax credit, which doesn't make sense. Yes other states get to claim their state income tax on their Federal return, but they have to pay a State income tax as well as sales tax. We only pay sales tax and get to claim it. Don't get me wrong I will claim it happily but we really weren't at a disadvantage when we paid less to begin with!

    • Guest

      People living in the states with both a state income tax and a sales tax get to choose which one they use for their itemized return, so this is meant to level the playing field for non-income state tax folks

    • Steve

      not all states have a sales tax and an income tax .our property tax and sales taxare higher than a lot of states income tax. If they can deduct what they pay for income tax, and we cant deduct our equivelent then we are at a disadvantage.

  • Hire CFO

    I think that is a good news for the business persons that they will get relief from sales tax though a little for next 2 years, Hope they will not impose or increase the taxes on any other services whether directly or indirectly

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