Bipartisan group of senators asks leadership to extend state sales tax deduction

People who live in states with income taxes can deduct their state income tax from their federal income tax through a permanent deduction. But people in states that don’t have state income tax — Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming — won’t be able to deduct their high state sales taxes, as they did from 2004-2011, because the deduction expired at the end of last year.

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“One of our top priorities in the coming weeks is the extension of the deduction for state and local sales taxes, which has strong bipartisan support,” the senators wrote. “More importantly, it has the support of over 10 million Americans, who, because the deduction expired at the end of 2011, are at risk of losing the ability to deduct state and local sales taxes for the 2012 tax year. As we approach the end of the year, and the forthcoming tax filing season, we ask for your support in reinstating this important deduction.”

Hutchison has sponsored S. 80 to make the sales tax deduction permanent. In the letter, the senators wrote that not continuing the tax deduction for eight states would unfairly affect 22 percent of the U.S. population.

“Residents of states that levy income taxes have long been able to deduct these state income taxes through a permanent deduction,” the letter stated. “However, taxpayers in our states, which use sales taxes in lieu of income taxes to finance government services, have been treated inequitably ....

“We face many tough decisions in the next few weeks. The extension of the state and local sales tax deduction should not be one of them. We urge you to ensure that our constituents receive fair treatment under the tax code and pass an extension of the state and local sales tax deduction as soon as possible.”

Sens. Maria Cantwell (D-Wash.), John Cornyn (R-Texas), Mike Enzi (R-Wyo.), Bill Nelson (D-Fla.), John Thune (R-S.D.), Lamar Alexander (R-Tenn.), John Barrasso (R-Wyo.), Dean Heller (R-Nev.) and Tim Johnson (D-S.D.) also signed the letter.