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Congress approves sales tax deduction
11:39 PM PST on Friday, December 8, 2006
WASHINGTON, D.C. - Congress has passed a tax measure that includes a provision allowing residents of Washington - and eight other states without income tax - to deduct state sales taxes from their federal income tax returns.
The Senate cleared the bill for President Bush's signature early Saturday by a 79-9 vote.
Washington state lawmakers celebrated House passage of the measure on Friday.
Rep. Brian Baird, D-Wash., said the measure " ... will help millions of hardworking Americans in Washington and across the country."
Last year alone, Washingtonians used the sales tax deduction to save hundreds of millions of dollars - money that went to college tuition, home improvement projects and to help the local economy thrive, Baird said.
"Washington families rely on and need the state sales tax deduction and the college tuition deduction," said Rep. Dave Reichert, R-Wash. "These provisions and others keep money in the hands of the people who earn it and to whom it has the greatest potential value."
Washington is one of nine states without an income tax where taxpayers could have lost the ability to deduct state sales tax from their federal returns had the 2-year-old law not been renewed. The renewal extends it another two years.
Rep. Cathy McMorris, R-Wash., earlier called extension of the sales tax deduction her top priority in the lame-duck session.
"Washington state residents should not be forced to pay higher taxes simply because they live in a state that does not have a state income tax," she said. "It is a matter of fairness."
Extending the sales tax deduction is estimated to save the average family in Washington as much as $500 a year.
Washington lawmakers from both parties said Congress should work to make the sales tax deduction permanent. That way, "we're not waiting until the 11th hour every year to bring relief to working men and women in Washington and throughout the country," Baird said.
In addition to Washington, the affected states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming.
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