Scraped from a local newscast.
Sales Tax Deduction On Tap For Texans – Average Texas Family Will Save An Estimated $300
Congress Monday passed a corporate tax reform bill that includes deduction of state sales taxes on federal income tax returns. Supporters of the bill said the change corrects an unfair part of federal tax law that’s been on the books for almost 20 years Texas has a higher sales tax than many states, but no state income tax, and while people in other states have been allowed to deduct state income taxes from federal returns, Texans have not been allowed to deduct sales tax.
The U.S. Senate has now passed a bill already approved in the House to end the disparity for Texas and six other states without an income tax. “When the president signs this bill, which he will, we will be able to deduct our sales taxes just as income tax states deduct their income taxes,” Republican Sen. Kay Bailey Hutchison said. According to Fort Worth accountant Don McCartney, Texans used to deduct sales tax until 1986, and that there were tables to estimate the deduction based on family size and income. “You just look it up and count your deduction for a certain amount. If you have kept receipts and are able to count a larger amount than what the table allows, you take the larger of the two,” McCartney said.
The new law applies to 2004 and 2005 returns. Congress would have to pass it again to cover years after that.
The estimated savings for 2004 is $310 for an average Texas family.