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Fiscal Cliff Deal: Washington Taxpayers May Deduct Sales Taxes

  • Jan 7, 2013 | Gail Cole

 Want That Sales Tax Deduction? Save Those Receipts.

United States Senator Maria Cantwell (D) brought some good news home to Washington State last week. The recently passed Fiscal Cliff Tax Bill "includes the sales-tax deduction for taxpayers in Washington and a half-dozen other states." The senator told The Olympian that the sales-tax break was a top priority and that it is now protected for 2012 and 2013.

According to Senator Cantwell, "Extending the state sales tax deduction puts an average of $500 back in the pockets of 850,000 Washington tax filers." These figures are based on the most recent available data from the IRS, from 2009.

There is a note at the bottom of the IRS page on Deductible Taxes that reads, as of this writing:

"The optional deduction for state and local sales taxes expired effective 12/31/2011. This deduction was available for the period starting 01/01/2007 and ending 12/31/2011. There is proposed legislation that could extend it for 2012. Check your return instructions prior to filing."

Keep an eye on that page; it should soon reflect changes imposed by the Fiscal Cliff Deal.

The sales tax deduction is particularly important for states with sales tax but without a state income tax, because "taxpayers are eligible to take a deduction for state and local sales tax or state and local income tax -- but not both." These states are: Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. (money-zine.com).

Information about the Federal Sales Tax Deduction for Washington is available at the Washington State Department of Revenue.

Additional information is available at IRS Tips and Guidance for Determining Sales Tax Deduction.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.