Expiring Sales Tax Deduction Makes Shoppers Unhappy

Last updated on November 27, 2012

As the new year is approaching, American taxpayers’ worries about the expiry of many tax deductions that they had been enjoying till now is increasing. Shoppers are unhappy that the federal deduction for state and local sales taxes will no longer be there come January. That will mean that after 31st December, 2012, you will be paying more when you shop.

Sales tax deduction is just one of the many tax breaks that are expiring this year, and there is little likelihood of an extension. The Congress is already looking for ways to get more taxes, and is considering placement of additional taxes on the rich.

The deduction was introduced after those who live in the states where there is no state income tax complained that they were entitled to a federal deduction for the state income taxes, but could not claim a deduction on their federal returns for sales taxes. Texas and Florida has state income taxes, but do not have sales taxes. This was being unfair to them.

From next year shoppers will need to pay more taxes to the government. Along with sales tax deduction, taxpayers will also be losing other deductions that can make a substantial difference in the amount of taxes they pay to the government. With the tax breaks expiring and the country getting ready to battle the fiscal cliff, January, 2013 will be the month to see the outcome of the tax decisions of the government.