Cantwell, Heller, Murray, Introduce Bipartisan Bill to Make Sales Tax Deduction Permanent

Legislation would benefit nearly 900,000 WA state tax filers

WASHINGTON, D.C. – Today, U.S. Senator Maria Cantwell (D-WA) and Senator Patty Murray (D-WA) announced that they have joined seven other Senators in introducing bipartisan legislation this week to make the state and local sales tax deduction permanent.

This legislation, S. 126, would provide tax fairness for taxpayers in states that don’t have an income tax, and therefore, taxpayers can’t claim a state income tax deduction on their federal tax returns. Those states include Washington, Alaska, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming.

Congress authorized a one-year extension of the sales tax deduction for 2014, meaning taxpayers can claim it on their April 2015 tax returns. But the deduction will lapse unless Congress renews it in 2015.

Senator Dean Heller (R-NV) and Cantwell are lead sponsors of the bill. Other sponsors include: Murray, Mike Enzi (R-WY), John Thune (R-SD), John Cornyn (R-TX), Bill Nelson (D-FL), Lamar Alexander (R-TN), and Senate Minority Leader Harry Reid (D-NV).

“It is time to permanently correct this inequity in the tax code and provide certainty for Washington taxpayers,” said Cantwell, a member of the Senate Finance Committee. “Taxpayers shouldn’t have to guess every year whether they will be able to claim this deduction. This is a matter of tax fairness for 11 million taxpayers nationwide – and it’s time for Congress to act.”

“Plain and simple, making the state sales tax deduction permanent is a basic issue of fairness.  Washington state families and businesses should not have to pay more in taxes than Americans in other states, and they shouldn’t be forced to wonder each year whether the deduction will be in place when it’s time to do their taxes,” Murray said.  “I’m glad that we were able to include a one-year extension of the sales tax deduction late last year, but it’s past time to fix this issue for good.”

“State and local sales tax deductions benefit Nevadans greatly. Today, I introduced bipartisan legislation with my Democratic colleague Senator Maria Cantwell to ensure these tax breaks remain permanent,” Heller said. “The Silver State’s families have seen their fair share of difficult times over the years. This bill allows them to keep their hard-earned money in their own pockets and in turn, boost local economies.”

About 900,000 Washington state tax filers took advantage of the state sales tax deduction in 2012, reducing their taxable income by $1.9 billion, according to IRS data. In 2012, the sales tax deduction enabled Washington state taxpayers to save an average of $602, according to a Pew Charitable Trusts report.

Congress abolished the sales tax deduction in 1986, creating a disparity for states that don’t have an income tax. In 2004, Congress restored the sales tax deduction and has approved temporary extensions of it but has not made it permanent.