Start saving receipts (like, all of them)
House and Senate negotiators have reached a tentative agreement on a bill that will allow Tennesseans (and other states) to deduct sales taxes they paid for federal income tax purposes:
Lawmakers in the states without an income tax have sought the sales tax benefit, which was taken away nearly 20 years ago in another federal tax overhaul.
The change would benefit Tennesseans who itemize deductions on their federal returns. The Congressional Research Service says that’s about one in four state taxpayers.
The agency estimates the tax benefit would average $470 for those who itemize.
That just seems like a paperwork nightmare.
October 6th, 2004 at 12:36 pm
This is a piece of good news for us Texans, too. With no income tax here, we pay up to 8.25% sales tax. Varies since some localities don’t asses the “city” portion.
You’re right about receipts being a hassle, but this little “bonus” could help new car/truck sales.
October 6th, 2004 at 2:52 pm
I’d say the deduction would be a standardized one based on an income table or something similar, rather than individual receipts.
October 6th, 2004 at 2:56 pm
“I’d say the deduction would be a standardized one based on an income table or something similar, rather than individual receipts. ”
That would be nice, but i ask all of you readers not to underestimate the time and trouble that i and people like me would go through to keep my money from falling into the hands of the goverment.
It may not be time effecitve, or even worth it from me to spend my own time doing it, but i would be willing to do it out of (the most powerful emtion of them all) spite.
October 6th, 2004 at 4:50 pm
We pay 9.25% in Tennessee. But in Illinois, they pay around 9% sales tax, and they do have a state income tax.
October 6th, 2004 at 5:00 pm
Yes, Brian A., in the old days when we used to be able to deduct sales tax there was a table of some sort, but we also had the option to save all receipts. In those days SKB and I had so little money, thus very few receipts, we could track our sales tax.
Maybe everyone should also go for another tax reduction they allowed way back then called income averaging. This was for people who made very little money (e.g. out of high school or college) then within a certain number of years got a good job with much better money. We could average our incomes over a number of years and pay income tax on the average, thus not having to pay the higher tax at least for the first year or two when incomes would rise dramatically. Keep in mind dramatic income rise back then was $10,000/year to $20,000/year.
October 6th, 2004 at 5:00 pm
Washington goes up to 9% (at least, that’s the highest I’ve seen).
But I am in a somewhat unique sitution: I am legally, and for tax purposes, a resident of the state of Washington, which has no income tax. However, I am in the Army, and stationed in South Carolina, which does have an income tax. I paid very little actual sales tax in WA last year. Do I get to deduct the sales tax paid in SC?
October 6th, 2004 at 9:18 pm
I don’t think any state or local taxes should be deductible. If you want to live in a high tax state like CA, why should people living in low tax states be expected to pick up a larger share of the federal budget so that you don’t have to deal with the natural results of that choice?