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News Release from Comptroller Susan Combs

Contact: Allen Spelce or R.J. DeSilva
512-463-4070

For Immediate Release
October 30, 2007

State Leaders Work to Preserve Beneficial Tax Break


AUSTIN — Comptroller Susan Combs and Texas Congressman Kevin Brady want to preserve a tax deduction that saves Texans more than $1 billion per year on their federal income tax. A law allowing Texans who file itemized federal income tax returns to deduct state and local sales taxes will expire at the end of this year if Congress does not vote to extend it.

“In Texas, this law has had a significant positive impact on the state’s economy, accounting for additional money in taxpayers’ pockets, as well as increased job creation, investment and economic productivity,” Combs said.

Combs estimates extending the deduction would save Texans a projected $1.2 billion a year, or an average of $520 per filer claiming the deduction. The Comptroller says continuing the deduction for 2008 and beyond is vitally important, because it is associated with 15,700 to 25,700 jobs and $1.1 billion and $1.4 billion in gross state product.

Congressman Brady led the bi-partisan effort in the U.S. House of Representatives to restore the federal deduction in 2004 and has filed legislation that would make the sales tax deduction permanent.

“This has always been about fairness and about stretching our families’ pocketbooks here in Texas,” said Brady, who applauded Comptroller Combs on her initiative to help preserve the tax relief. “These are real savings for taxpayers and real jobs for our state.”

Combs sent a letter to the Texas congressional delegation and other key lawmakers, urging them to support extending the sales tax deduction. On Nov. 6, Congressman Brady and the Comptroller’s staff will brief members of Congress on the impact of the sales tax deduction on Texas.

“This provision puts taxpayers in Texas and other states without a state income tax on an equal footing with citizens elsewhere,” Combs said.

Texas Governor Rick Perry, along with governors from the six other states who enjoy no state and local income taxes, sent a letter to congressional leaders urging an extension of the state and local sales tax deduction.

“I urge Congress to act swiftly to extend and make permanent the state and local sales tax deduction to ensure Texas taxpayers are treated fairly and equally to other states,” Perry said.

Since 2004, residents of Texas, Tennessee, Florida, Nevada, South Dakota, Washington and Wyoming have been able to claim a deduction on their federal income tax for state and local sales and motor vehicle taxes they have paid, giving them a tax break similar to residents of other states, who can deduct their state income tax from their federal income tax.

For more information, contact Allen Spelce or R.J. DeSilva in the Comptroller’s office at (512) 463-4070 or Jessica Peetoom in Congressman Kevin Brady’s office at (202) 225-4901.

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