State sales tax deduction will be extended for 2 years

WASHINGTON -- 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.”