Tennessee Lawmakers Push To Continue Sales Tax Deduction

Knoxville (WVLT) - It's been saving you money on your taxes for two years now.

But if Congress doesn't vote this week to extend the sales tax deduction you might not get as big of a refund.

Volunteer TV's Whitney Daniel helps you break down the numbers.

Legislators and tax preparers both say Tennessee should be able to deduct their sales tax from their federal income taxes because Tennessee is one of six states withouth a state income tax.

"This is the last week we're in session so if it doesn't get done this week, it won't get done, says Republican Congressman Jimmy Duncan.

And if it doesn't get done, you could be saving a lot less on your taxes.

Duncan says, "It's something that was in the law for many years and then was taken out, we think, unfairly an unfortunately."

The deduction was taken away during the 1986 tax reform legislation and wasn't reinstated until 2004.

"There was no opposition to making it permanent except for budgetary considerations," stated Ducan.

Now, for the past two years, Tennesseeans have been saving an average of $205 million a year.
That's $313 per return.

And legislators say it's only fair for Tennessee to reap the same rewards as other states.

"We're one of six states that does not have a state income tax," says Rick Donovan, manager of H & R Block.

"We've got nothing, whereas all the states that have an income tax were able to deduct that on ther federal tax."

Tax preparers say it's really only beneficial to itemize for the sales tax deduction if you've made a significant purchase like a car, motorcycle or boat, for example.

Donovan says, "You're allowed to deduct the full amount of that sales tax in addition to whatever the tax table allows you to take."

You aren't limited to a certain amount that you get back.

It generally follows the guideline of: the more you make, the more you get.

Donovan states, "The assumption being, the more income you have the more you're spending on things that would be subject to sales tax."

But even if you aren't making much, the littlest amount can add up.

"You've got a population of roughly 6,300,000 and it's not just the taxpayers that are effected, it's all of their families, all their children and so forth that would have less money for food, clothing and everything else," says U. S. Congressman Ducan.

The entire provision is called the "Tax Extender Package".

There are other deductions included, like school teachers who take money out of their own pocket to buy supplies for their classrooms.

The main focus is the sales tax deduction, and Congress will have to make a decision one way or the other this week.