Taxpayers who itemize their deductions for their federal tax return could lose a significant tax benefit in 2014. They currently get a deduction for any state and local sales taxes that they paid throughout the year. However, this deduction only lasts up until the end of the year and must be renewed by Congress if taxpayers are going to claim this benefit in the future. Given the American government’s state of gridlock, a renewal doesn’t seem likely in the near future.
If the itemized sales tax deduction expires, it will be particularly painful for residents of states with high sales tax rates. The nonprofit research group The Pew Charitable Trusts released a study analyzing the impact of this deduction ending. The group found that residents of Washington would be hit the hardest. Nearly 30 percent of Washington taxpayers claim this deduction for an average deduction of over $600. Residents of Nevada, Texas, Florida, Tennessee, Wyoming, and South Dakota will also take a financial hit as these states have high sales tax rates so many taxpayers use this deduction.
Read more at The Washington PostCharles F.
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