Senate committee agrees to revive sales-tax deduction for Washington residents

The Senate Finance Committee on Wednesday broke a long legislative logjam by agreeing to extend  dozens of expired and expiring tax breaks — including sales-tax deductions for residents of Washington and seven other states without income taxes.

The bipartisan deal is the first move in months to revive a host of lapsed tax breaks. A bickering Congress failed to renew the sales-tax deductions as well as tax breaks for research and development, renewable energy, transit expenses and other provisions that expired at the end of 2011.

The compromise deal was announced by Senate Finance Committee Chairman Max Baucus, D-Mont., and Ranking Member Orrin Hatch, R-Utah. The measure would have to be voted on by the full Senate this fall. It’s unclear if the House of Representatives will take up the tax-extenders package any time soon.

The Finance Committee also agreed on a one-year patch for the alternative minimum tax (AMT)  to forestall higher income taxes that would have hit 27 million filers next April. The AMT is one of many temporary tax credits and cuts that regularly get renewed, or extended, piecemeal.

The latest proposed batch of extenders is expected to cost the Treasury nearly $152 billion over 10 years. Baucus and Hatch said they trimmed about a quarter of the usual tax extenders.

Since the sales-tax deduction was enacted in 2004, Congress has let it expire twice since 2009. Last year Sen. Maria Cantwell, who sits on the finance panel, introduced a bill to permanently write the deduction into the tax code. But the measure, whose co-sponsors include fellow Democrat Sen. Patty Murray,  has made little headway amid the looming expiration of the Bush-era tax cuts at the end of December.