WASHINGTON - Tennesseans would no longer be able to deduct state and local sales taxes on their federal returns under a tax-reform plan pushed by House Republicans, raising the possibility of a tax increase for thousands of people across the state.
Since 2004, taxpayers have had the option of taking an itemized deduction for either state and local income taxes or sales taxes on their federal returns.
Tennesseans in Congress have fought for years to keep the sales tax deduction, arguing it is a matter of fairness since residents of other states can deduct their state income taxes. Tennessee doesn't have a state income tax.
Read more at our news partner's website, tennessean.com.
Sales tax deduction
The Republican tax plan would eliminate the sales tax deduction. Since 2004, taxpayers have had the option of taking an itemized deduction for either state and local income taxes or sales taxes on their federal returns.Here's how many Tennesseans have taken advantage of the deduction. * For 2015, 2,970,180 federal tax returns were filed by Tennesseans. * Of that total, 453,650 returns, or about 15 percent, included a deduction for sales tax. * The total amount deducted was $1.12 billion for an average of $2,469 per return.
Key provisions of GOP tax plan
* Corporate tax rate would drop to 20 percent, down from the current rate of 35 percent. * Standard deduction would nearly double to $24,000 per married couple and $12,000 for individual taxpayers. * Child tax credit would raise to $1,600 from the current $1,000. * Estate tax exemption would double to $11.2 million and would be eliminated completely after six years. * Property taxes can be deducted up to $10,000. * Mortgage interest deduction will be limited to homeowners with mortgage balances of $500,000 or less.