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Originally published Saturday, December 17, 2011 at 2:46 PM

Sales-tax deduction to expire for 2012

For the second time in two years, sales-tax deductions for residents in Washington and six other states without income taxes are expiring because of congressional inaction.

Seattle Times Washington bureau

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WASHINGTON — For the second time in two years, sales-tax deductions for residents in Washington and six other states without income taxes are expiring because of congressional inaction.

The Senate on Saturday passed a two-month extension of a payroll-tax reduction and extended unemployment benefits for long-term jobless people.

But the deal does not extend beyond Dec. 31 a provision to allow taxpayers who itemize their returns to write off state and local taxes in lieu of state income taxes. In 2009, those deductions lowered a typical Washington filer's taxable income by $2,100.

It's possible Congress could approve the sales-tax deductions retroactively. That's what happened after the provision expired at the end of 2009. But it took Congress until December 2010 to pass it, leaving consumers in Washington, Alaska, Texas, Wyoming, Florida, Tennessee and Nevada in limbo for a year.

Lawmakers from those states had fought to make the sales-tax deduction part of a last-minute deal to extend a variety of tax breaks. But the sales-tax provision got left behind amid tense negotiations over payroll-tax breaks and unemployment compensation.

Democrats originally pushed to renew for one more year a cut in Social Security taxes from 6.2 to 4.2 percent. They also wanted to drop the rate further to 3.1 percent for 2012. Republicans would agree only to keeping the rate at 4.2 percent.

Kyung Song: 202-662-7455 or ksong@seattletimes.com

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