Tax relief from 8.25%

Rejoice fellow Texans! Early Saturday morning Congress approved the state sales tax deduction.

That means that those of us who itemize will be able to write off that pesky percentage, which reaches 8.25 percent in some Lone Star locales (like here in Austin) when you count city and county add-ons, that we pay on most of the things we purchase.

The sales tax deduction, along with the teachers' classroom expense costs, a $250 adjustment to income available to nonitemizers as well as folks who do fill out a Schedule A, and tuition and fees paid toward college, another write-off that any filer can take and which could lower taxable income by up to $4,000, were part of H.R. 6408.

These tax breaks, however, are still temporary. Under the extending law, they will expire again at the end of 2007 and this process will likely be repeated next holiday season.

One day lawmakers might actually do some real, long-term thinking about tax policy and quit dealing with it in such a short-sighted, piecemeal fashion. Maybe.

Sorry. I wandered off into the far reaches of my imagination there for a minute.

Finally finished: As mentioned in an earlier post, the House easily approved the tax-plus (health care and trade issues also were included) bill on Friday afternoon. The Senate dallied a bit, finally OKing the measure around 2 a.m. Saturday and sending it on to the president, who is expected to soon sign it into law.

This Washington Post article details the objections some Senators raised about the excessive cost of the bill's nontax provisions. In the end, though, the recalcitrant Senators likely were swayed by the thought of 19 million constituents who, without the legislation, would face higher tax bills this coming April.

As part of the last-minute maneuvering, lawmakers also finally made sure the unfunded branches of the federal government have enough money to operate through mid-February. Again, as with the tax breaks, lawmakers continued to approach their jobs in a half-a**ed temporary manner.

Just before dawn, all the shouting was over and Capitol Hill emptied out with the adjournment of the 109th Congress.

The House closed its doors around 3 a.m.; the Senate said its goodbyes about an hour and a half later. And no, even though our cable system gets three C-SPAN channels, I wasn't watching. Even I am not that big of a tax geek! I read it about it this morning. First thing this morning, but this morning.

Now the ball is back in the IRS' court, as it decides what to do about forms that were printed sans these final legislative acts.

But that's nothing you and I have to worry about. We can just be thankful that we got this long-promised Christmas tax present.

Speaking of presents: If you're planning in the next few weeks to buy an auto as a gift, for yourself or someone else, take note of the sales tax you pay on the vehicle.

With that tax break back on the books, you can add that amount to the figure that the IRS will supply in tables listing how much of a state sales tax deduction each state's residents can claim.

The same thing applies to the sales tax on other "motorized" vehicles, including boats and airplanes, just in case you're feeling really generous.

Sales tax winners: The biggest beneficiaries of the sales tax deduction are folks like us in Texas who have no state income tax to deduct. There are seven of us without a state income tax: Texas, Nevada, Florida, Alaska, South Dakota, Washington and Wyoming.

Two others, New Hampshire and Tennessee, tax only dividend and interest income.

Of course, Alaska residents don't get much out of the continued tax break because that state also has no sales tax (some of its local jurisdictions, however, do collect them). Neither do New Hampshire, Delaware, Montana and Oregon, although these states collect sales-type taxes on specific transactions, such as the price of hotel rooms.

Comments

[deepak taxes relief]

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