Texas Sales Tax Deduction Can Get Lost In The Shuffle

Forty-two states have an income tax, and people in those states can use it as a permanent deduction from their federal taxes. Of course, Texas doesn’t have an income tax, but instead are allowed to deduct their state and local sales taxes. And through 2011, a lot of Texas taxpayers took a deduction for sales taxes.

Congress has not extended the sales tax deduction for this year and shoppers are spending more this year with the improved economy.
For Texans who itemize on their federal tax returns there’s some comfort when they know they can deduct their state and local sales taxes. This deduction could get lost in the shuffle with all the focus on the upcoming fiscal cliff debate.

The IRS said in 2010, the latest year for tax data, almost 2.3 million returns in Texas – about 20 percent – filed for the deduction. It’s sought across all income levels, especially the middle class, with the average tax saving us $500.

After fighting many years, in 2004 Senator Kay Bailey Hutchison got Congress to allow Texans to deduct their sales taxes. 

”All I’ve ever asked is for parity,” she said. “If you are going to give income taxes paid at the state level an exemption, you should give sales taxes as well and give people the choice.”