U.S. Rep. Bart Gordon is reminding Tennesseans that they are eligible to deduct state and local sales tax from their federal income tax returns for the 2007 calendar year.
“As we get our tax returns in order, we should all remember this deduction,” said Gordon. “Without it, Tennesseans would pay more in federal taxes than residents of equal income in states with an income tax.”
Taxpayers were allowed to deduct state sales taxes on their federal returns until 1986, when the deduction was repealed; however, the state income tax deduction was retained.
In 2004, Gordon and other members of Congress from states without an income tax succeeded in reinstating the sales tax deduction on a temporary basis. The deduction gives taxpayers the option to claim state and local sales taxes instead of state and local income taxes when
they itemize their federal income tax returns.
The sales tax deduction expired at the end of 2007. That means Tennesseans are eligible to take the deduction for tax returns filed this year for income earned in 2007, but the provision would need to be extended for taxpayers to use it when they file taxes in 2009.
Gordon said he will work with his colleagues in Congress to reinstate the deduction so Tennesseans can continue to use it.
“Tennessee taxpayers shouldn’t be penalized for living in a state without an income tax,” said Gordon. “It’s only fair to continue to make this deduction available to hardworking Tennesseans.”
Taxpayers who want to claim the deduction but have not kept receipts showing paid sales tax can use tables provided by the Internal Revenue Service at www.irs.gov or call the IRS at 1-800-829-1040 to have the forms sent by mail.
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