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December 20, 2004

State sales taxes are now deductible on Form 1040?

I just happened to stumble across a story about something that should have gotten a lot of media coverage, but to my knowledge, has received almost none.

Did you know that, starting with your 2004 federal tax return, you can choose between deducting state income taxes and deducting state sales taxes? The IRS even has a handy table to let you come up with an officially approved deduction estimate if you have no desire to tally up your receipts for the year. This is welcome news for residents of states which have no state income tax (like my home state, Texas).

Why the apparent news blackout?

UPDATE: I posed this question at Free Republic. Most of the responses so far indicate that the story didn't get much coverage in the general-interest media. In other words, unless you work in the financial services industry, or if you hang out in one of their media haunts (such as BankRate.com -- where the above story was found -- or CNBC), you probably didn't hear about it.


texasbug said...

Hey, here's a little more goody for your goody bag: Even if you use the IRS table to calculate your "average" sales tax paid, you can still add actualy sales tax paid on large items like a new car or boat to the table amounts. Pretty cool! It's only for 2004 and 2005 as of right now, so consider that if you're planning on making a large purchase over the next year.

texasbug said...

Oh, and I forgot one thing....this new law was passed the week before the election, so now does the news blackout make sense? No one in the media wanted the folks to get excited about the tax cuts and vote for Bush as a result.

Tim said...

That makes perfect sense. I'm usually pretty good at working out the media's motivation for reporting or not reporting an issue. For some reason, my brain misfired on that one.

Time for a vacation.