Bill would extend sales tax deduction in Washington

A jobless benefits bill that passed the U.S. Senate on Tuesday would deliver another year of sales tax deductions for residents of Washington and eight other states if it passes the House and is signed into law.

The extension has been inserted in federal spending bills since 2004, largely through the efforts of Washington’s Democratic U.S. Senators Maria Cantwell and Patty Murray and U.S. Rep. Brian Baird, D-Vancouver.

Both senators said the deduction is needed now more than ever.

“Especially in these tough economic times, it is important to know that Washington state residents will be treated equally at tax time,” Cantwell said in a statement. “My long-term goal in the Senate is to make this deduction permanent.”

“This extension puts money back into the pockets of hard-working Washington families,” Murray echoed. “Especially now, we need to help families make every dollar stretch at tax time as they struggle to afford mortgage, college and car payments.”

In 2008, the sales tax deduction saved Washington families who itemize their deductions more than $350 million on their federal income tax returns.

Between 1986 and 2004, the federal tax code did not allow deduction of state and local sales tax payments, though taxpayers in states with an income tax could deduct those payments. That disparity ended in 2004 with restoration of the sales tax deduction, but the deduction has never been made permanent.

The current extension will expire at the end of this year.