With 1 Month Until Tax Day, Cantwell Encourages Washingtonians to Take Advantage of State Sales Tax Deduction

Cantwell: Deduction means an average of $500 back in taxpayers’ pockets

WASHINGTON, D.C. – With a month to go until the April 15 tax deadline, U.S. Senator Maria Cantwell (D-WA) is reminding Washington state residents today to take advantage of the state and local sales tax deduction if they itemize their federal returns. The deduction provides tax fairness to residents of Washington and eight other states without an income tax. Taxpayers can claim the deduction on their 2012 taxes.

Senator Cantwell has been a Senate leader in fighting to extend the deduction for future years. Cantwell led the effort to pass into law a two-year extension of the state and local sales tax deduction, covering calendar years 2012 and 2013 – and has consistently introduced legislation to make the extension permanent. The inclusion of the sales tax deduction in the fiscal cliff deal capped off a year-long fight by Cantwell for its extension.

“Washingtonians finalizing their 2012 tax returns should remember to deduct state sales tax if they itemize,” said Senator Cantwell. “The sales tax deduction puts an average of nearly $500 back in Washingtonians’ pockets. We fought to ensure that this year Washington state could take advantage of the deduction during tax season and I will continue our work to keep tax fairness for Washingtonians intact.”

For 2010, the most recent year of published IRS data, more than 950,000 Washingtonians took advantage of the state and local sales tax deduction and reduced their taxable income subject to federal income tax by more than $2 billion. In addition to Washington state, taxpayers in Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming also benefit from the sales tax deduction. In 2010, taxpayers across the nation reduced their taxable income by $17.9 billion with the deduction.

Washington taxpayers can also use other tools available through the IRS to ease the tax filing process. The IRS Free File Program provides eligible taxpayers with free online individual federal income tax preparation and electronic filing services. This program helps taxpayers prepare their taxes electronically through a public-private partnership with nearly 20 private-sector companies that offer free tax preparation options. More information can be found here: http://freefile.irs.gov/

Cantwell, a member of the Senate Finance Committee, has led the effort each year to extend the deduction. In August 2012, Cantwell helped pass a bipartisan bill in the Senate Committee on Finance that included a two-year extension of the sales tax deduction. In March 2012, she and Senator Marco Rubio (R-FL) introduced an amendment to extend the deduction for one year.

For nearly two decades, Washington taxpayers were penalized because the federal tax code did not allow deduction of state and local sales taxes. That disparity ended in 2004 when Senator Cantwell successfully restored the deduction for the first time since 1986. This enabled taxpayers in Washington and other states that have no state income tax to deduct sales taxes from their federal income tax. But the extension was never made permanent, requiring repeated approval by Congress.