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BACK TO THE FUTURE: IRS ISSUES SALES TAX TABLES
December 17, 2004
Congress took a page out of pre-1986 tax law this year by allowing taxpayers to choose between deducting sales taxes and income taxes. The IRS was directed to come up with standard tables allowing people to take a sales tax deduction without having to collect their receipts for the year.
The IRS has just issued those tables. A single Iowa taxpayer with $100,000 and no dependent could take a sales tax deduction of $783, for example. Such a taxpayer would normally forego the sales tax deduction; the income tax deduction would probably be much larger.
If they bought some big-ticket items, they might take the sales tax deduction instead. Sales tax on cars, motorcycles, motor homes, recreational vehicles, SUVs, trucks, vans, and off-road vehicles can be taken in addition to the table amount. Or, you can just save all your receipts (please don't bring them to your preparers!).
So, if an Iowan buys something like this...
...she might just take the sales tax deduction instead (MSRP of $357,000 x 6% Iowa sales tax rate = $21,420 sales tax, + the amount from the tables).
Of course, then she will probably just be in alternative minimum tax anyway, and the deduction will be worthless.
For residents of non-income tax states, this is a big deal.
The tables are here (pdf format)
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