Today, the U.S. House of Representatives passed legislation to ensure tax fairness for Tennesseans by extending the state sales tax deduction. House passage of this legislation follows action in November by Congressman Bart Gordon and a bipartisan group of his colleagues who strongly urged congressional leaders to extend this tax deduction.
“Each year, more than 500,000 Tennesseans take advantage of this important tax deduction,” said Gordon. “This bill will allow Tennesseans to continue deducting state and local sales taxes, similar to the way residents of other states are allowed to deduct their state income taxes from their federal income tax returns.”
Tennessee is one of nine states that has no state income tax. In 1986, a federal bill was repealed that allowed taxpayers to deduct either state sales taxes or state income taxes from their federal return. Since then, Gordon has worked with his colleagues from Tennessee and the other eight states to reinstate the sales tax deduction each year.
In a recent letter to House leadership, Gordon and his colleagues wrote, “The sales tax deduction saves taxpayers in our states millions of dollars per year, and it is a vital component of our states’ economies, spurring growth and creating jobs. During these trying economic times, it is critical to provide tax certainty, so our constituents can know whether the state and local sales tax deductions will be available for purchases they make this year and in the future.”
The House-passed bill provides taxpayers with the option to continue claiming state and local sales taxes instead of state and local income taxes when they itemize their federal income tax deductions for the 2009 calendar year.
The state sales tax deduction measure was included in the Tax Extenders Act, which passed the House by a vote of 241 to 181. The bill now moves to the Senate where it is expected to be passed and then signed into law.