The deduction has a long legislative history. It was included in the tax code until 1986, when it was eliminated until 2004, according to Cantwell’s office. Once restored, the deduction was extended several times but became tangled in partisan politics in 2010.
An extension was finally signed into law in December of that year. The late approval created administrative problems for the Internal Revenue Service, and the agency could not process tax returns with the deduction until mid-February 2011.
The new legislation, which Cantwell said was 18 months in the making, would settle the issue for the next two years. Taxpayers in Alaska, Florida, Nevada, Tennessee, Texas, South Dakota, and Wyoming also benefit from the sales tax deduction.
The bill approved by the finance committee also includes extension of several tax credits, including the New Market Tax Credit that was used by Farwest Steel to finance its facility at the Port of Vancouver. The company is expected to bring 200 new and existing jobs to the area.
Other measures included in the bill are “Returning Heroes and Wounded Warriors Work Opportunity Tax Credits” to businesses that hire qualified veterans; clean energy tax credits that encourage production of biodiesel and biomass fuel sources; and research and development credits for businesses that pursue key research breakthroughs that could benefit the larger economy.
