With six weeks to go until the April 17 tax deadline, U.S. Sen. Maria Cantwell (D-WA) this week urged Washington state residents to take advantage of the state and local sales tax deductions if they itemize their federal returns. The deduction provides tax fairness to residents of eight states without an income.
Washingtonians can claim the state and local sales deduction on their 2011 taxes; however, the deduction has not yet been extended past 2011. Cantwell “has been a Senate leader in fighting to extend the deduction for future years,” her staff said in a news release.
“Washingtonians finalizing their 2011 tax returns should remember to deduct state sales tax if they itemize,” Cantwell said. “This deduction puts an average of $500 back in Washingtonians’ pockets. I worked hard to ensure that this deduction was available to Washingtonians this tax season, and I will continue to fight to ensure Washingtonians get the tax fairness they deserve.”
For 2009, the most recent year of published IRS data, nearly 850,000 Washingtonians took advantage of the deduction and reduced their taxable income by over $1.8 billion, Cantwell’s office said. The value of the deduction varies depending on individual filing status and tax rate, but the $1.8 billion in deductions translated into $500 million or more staying in the Washington state economy instead of going to the U.S. Treasury. The deduction benefits taxpayers in Washington state and Alaska, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming.
Cantwell, a member of the Senate Finance Committee, has led the effort each year to extend the deduction, her office said. She secured an extension of the sales tax deduction in December 2010 – which expired at the end of 2011 – and “has consistently introduced legislation to make the extension permanent to avoid the economic uncertainty of temporary extensions.” The federal income tax deduction for state and local sales taxes is available for 2011 tax returns but its future remains unclear. Cantwell continues to fight to extend the deduction as a matter of tax fairness for Washingtonians.
On Feb. 14 during a Finance Committee hearing, Cantwell urged Treasury Secretary Timothy Geithner to advocate for a permanent extension of the state and local sales tax deduction. On Feb. 3, Cantwell, along with Marco Rubio (R-FL), Bill Nelson (D-FL) and 11 other Senators from both parties, urged Senate and Finance Committee leadership to make extending the state and local sales tax deduction a top priority this legislative session.
For nearly two decades, “Washington taxpayers were penalized because the federal tax code did not allow deduction of state and local sales taxes,” Cantwell’s office said. That disparity ended in 2004 when the senator successfully restored the deduction. For the first time since 1986, taxpayers in Washington and other states that have no state income tax were able to deduct sales taxes from their federal income tax. But the extension was never made permanent, requiring repeated approval by Congress.