Washington residents may deduct state sales taxes on their 2008 and 2009 federal tax returns if they itemize deductions. In addition, they can deduct $500 to $1,000 in property taxes on their 2008 returns and sales tax on new vehicles on their 2009 returns even if they don’t itemize, as explained below.
New Sales Tax Deduction Provided by the American Recovery and Reinvestment Act of 2009 (Stimulus Package)
This Act includes a provision to allow a federal income tax deduction of the sales tax paid on the purchase of new vehicles (from February 17, 2009 through December 31, 2009) including automobiles, light trucks, motor homes and motorcycles. This deduction is allowed regardless of whether the person itemizes their deductions. See IRS information at: http://www.irs.gov/newsroom/article/0,,id=204519,00.html.
New federal property tax deduction
Taxpayers can claim an additional standard deduction on their 2008 federal income tax returns, based on the state or local real-estate taxes paid in 2008. Taxes paid on foreign or business property do not count. The maximum deduction is $500, or $1,000 for joint filers. For more information go to the IRS web site at http://www.irs.gov/newsroom/article/0,,id=202106,00.html
What are the state and local sales tax rates?
The state sales tax rate is 6.5% and the local sales tax rate varies. See our list of local tax rates to find the rate at your residence.
Can I deduct tax on gas or diesel?
No. The tax on gasoline and diesel for on-road use is not a sales tax. The federal deduction is for sales tax only.
What about the RTA Tax?
Yes. The Regional Transit Authority (RTA) tax qualifies for the federal sales tax deduction. The RTA tax is a part of the general sales tax in much of Snohomish, King, and Pierce Counties. Take a look at our local tax rate chart to see the tax rate for locations located within the RTA.
What about the additional sales tax on motor vehicles?
The additional 0.3% tax that applies to sales of motor vehicles is not deductable since this tax only applies to one class of property.
Where do I take the deduction on my federal tax return?
People using a paper 1040 federal form and claiming the key extender provisions should follow these steps:
State and Local General Sales Tax Deduction:
- The deduction for state and local general sales taxes will be claimed on Schedule A (Form 1040), line 5, “State and local income taxes.” Enter "ST" on the dotted line to the left of line 5 to indicate you are claiming the general sales tax deduction instead of the deduction for state and local income tax.
- See the 2008 Instructions for Schedules A&B (Form 1040) for state and local sales tax tables, a worksheet, and instructions for figuring the deduction.
This option is available to all taxpayers regardless of where they live, though it’s primarily designed to benefit residents of states with either minimal or no state and local income taxes.