Cantwell: Proposal to Eliminate State Sales Tax Deduction “Dead on Arrival”

WASHINGTON, D.C. – During a U.S. Senate Finance Committee hearing today on individual tax reform, U.S. Senator Maria Cantwell called a proposal to eliminate the state and local sales tax deduction “dead on arrival.”

“One thing I wanted to make sure that I was clear on is – in the President’s tax proposal about getting rid of state and local tax deductions. We have fought for nearly 10 years and have finally restored our ability to deduct our sales tax from our federal obligation because we don’t have an income tax. So I hope the senators from Florida and Nevada and Texas will join me in saying this idea of trying to get rid of our state flexibility is dead – dead on arrival."

Washington is one of eight states without an income tax including Alaska, Florida, Nevada, South Dakota, Tennessee, Texas and Wyoming. Because taxpayers in these eight states don’t pay a state income tax, they cannot claim an income tax deduction on their federal tax returns.

The state and local sales tax deduction is critical to Washington state taxpayers. Some 900,000 took advantage of the state sales tax deduction in 2012, reducing their taxable income by $1.9 billion, according to IRS data. Washington state taxpayers were able to save an average of $602 with the state sales tax deduction in 2012, according to a Pew Charitable Trusts report

For years, Cantwell has fought for tax fairness for Washington state taxpayers. After previous extensions of the state and local sales tax deduction and more than a decade of uncertainty, Cantwell and Senator Patty Murray (D-WA) were able to include a permanent state and local sales tax deduction in the tax extenders bill of 2015, meaning Washingtonians would now no longer face ambiguity on the status of their deductions.