States Vary Widely in Number of Taxpayers Deducting State or Local Sales Taxes

January 11, 2012

Download Tax Foundation Fiscal Fact No. 288: States Vary Widely in Number of Taxpayers Deducting State or Local Sales Taxes

Texas Has Highest Percent of Taxpayers Choosing Sales Tax Deduction

Fiscal Fact No. 288

Introduction

Taxpayers who itemize deductions have the option of deducting state and local taxes from their income. In doing so, each individual taxpayer must decide to deduct either the income tax withheld from his or her wages, or the total sales tax he or she paid during the tax year. Individuals who choose to deduct sales taxes have the additional option of reporting the exact amount (if they saved all their receipts) or using an estimate from the IRS that depends on their state and their income level. The option to deduct sales tax, rather than income tax, is a temporary provision that must be extended each year.

States vary widely in the percentage of taxpayers who use each deduction. In general, more taxpayers elect to deduct income taxes than sales taxes. However, as one might expect, states that have no (or low) income taxes tend to see most taxpayers deducting sales taxes instead. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming are all states in which over half of the taxpayers elect to deduct state and local sales taxes, rather than income taxes, on their federal return, and these are all states that have either a very limited income tax (in the case of Tennessee) or no income tax at all. (The small number of taxpayers who do deduct income taxes in these states likely owe them to a different state than the one listed as their home on their federal return.) Taxpayers in these states therefore have the most to lose should this option not be extended each year.

The eight tables below summarize the latest data from the IRS, for tax year 2009.

Table 1. Percentage of Tax Filers Claiming State/Local Tax Deduction Choosing Sales Tax

State

Percentage

Rank

Texas

90%

1

Florida

89%

2

Tennessee

87%

3

Nevada

86%

4

Wyoming

84%

5

South Dakota

83%

6

Washington

83%

7

Alaska

51%

8

Arizona

26%

9

Mississippi

23%

10

North Dakota

20%

11

Alabama

16%

12

New Mexico

15%

13

Idaho

15%

14

California

15%

15

Illinois

15%

16

Oklahoma

15%

17

Kansas

15%

18

Arkansas

15%

19

New Jersey

14%

20

Louisiana

14%

21

Michigan

13%

22

Hawaii

12%

23

Georgia

12%

24

South Carolina

11%

25

Colorado

11%

26

Nebraska

11%

27

North Carolina

10%

28

New York

10%

29

Missouri

10%

30

Utah

10%

31

Iowa

9%

32

Kentucky

9%

33

Pennsylvania

9%

34

Connecticut

8%

35

Maine

7%

36

Ohio

7%

37

Vermont

7%

38

Rhode Island

7%

39

Wisconsin

7%

40

Minnesota

7%

41

Virginia

6%

42

West Virginia

6%

43

Maryland

5%

44

District of Columbia

5%

44

Massachusetts

5%

45

Indiana

5%

46

New Hampshire

4%

47

Montana

1%

48

Delaware

1%

49

Oregon

1%

50

United States

23%

Table 2. Sales Tax Deduction Amount as Percentage of Both Deductions

State

Percentage

Rank

Texas

76%

1

Tennessee

72%

2

Washington

72%

3

Nevada

59%

4

South Dakota

58%

5

Florida

55%

6

Alaska

50%

7

Wyoming

44%

8

Arizona

9%

9

Mississippi

7%

10

New Mexico

5%

11

Alabama

5%

12

Louisiana

5%

13

Illinois

5%

14

North Dakota

5%

15

Oklahoma

4%

16

Arkansas

4%

17

Idaho

3%

18

Kansas

3%

19

Michigan

3%

20

Colorado

3%

21

Utah

3%

22

Georgia

3%

23

Missouri

3%

24

California

2%

25

Nebraska

2%

26

South Carolina

2%

27

Hawaii

2%

28

Iowa

2%

29

North Carolina

2%

30

New Jersey

2%

31

Pennsylvania

2%

32

Ohio

2%

33

Kentucky

1%

34

New York

1%

35

Indiana

1%

36

Vermont

1%

37

Virginia

1%

38

Wisconsin

1%

39

Rhode Island

1%

40

Minnesota

1%

41

West Virginia

1%

42

Connecticut

1%

43

Maine

1%

44

New Hampshire

1%

45

Maryland

1%

46

District of Columbia

1%

46

Massachusetts

0%

47

Montana

0%

48

Delaware

0%

49

Oregon

0%

50

United States

6%

Table 3. Percentage of Taxpayers Deducting State and/or Local Income Taxes, 2009

Stat

Number of returns

Returns Claiming Deduction

% of total

Rank

Maryland

2,751,233

1,262,005

46%

1

Connecticut

1,711,715

677,005

40%

2

Massachusetts

3,171,888

1,193,487

38%

3

District of Columbia

312,067

117,799

38%

3

Virginia

3,685,674

1,382,878

38%

4

New Jersey

4,236,533

1,569,393

37%

5

Minnesota

2,541,797

929,304

37%

6

Oregon

1,732,774

630,687

36%

7

Utah

1,124,569

394,199

35%

8

Colorado

2,331,974

795,253

34%

9

Delaware

420,472

142,121

34%

10

Rhode Island

501,586

168,972

34%

11

Wisconsin

2,728,034

897,243

33%

12

New York

9,116,699

2,938,724

32%

13

Georgia

4,447,966

1,390,784

31%

14

California

16,384,130

5,064,964

31%

15

North Carolina

4,144,875

1,263,566

30%

16

Illinois

6,008,183

1,722,444

29%

17

Ohio

5,409,661

1,522,872

28%

18

Maine

624,567

173,858

28%

19

Idaho

657,773

181,564

28%

20

Hawaii

648,846

179,067

28%

21

Michigan

4,534,729

1,245,675

27%

22

Pennsylvania

6,058,513

1,660,553

27%

23

Iowa

1,392,004

380,977

27%

24

Montana

472,039

128,703

27%

25

Vermont

316,053

85,819

27%

26

Missouri

2,683,562

720,126

27%

27

South Carolina

2,024,495

540,092

27%

28

Nebraska

846,101

221,596

26%

29

Kentucky

1,841,152

471,922

26%

30

Arizona

2,670,661

684,486

26%

31

Indiana

2,951,362

751,207

25%

32

Kansas

1,310,164

333,037

25%

33

Alabama

2,048,831

494,472

24%

34

Oklahoma

1,585,616

358,617

23%

35

New Mexico

912,316

194,109

21%

36

Arkansas

1,211,644

249,591

21%

37

Louisiana

1,960,107

399,900

20%

38

Mississippi

1,241,390

223,061

18%

39

West Virginia

778,130

133,050

17%

40

North Dakota

322,972

49,919

15%

41

New Hampshire

659,001

101,135

15%

42

Alaska

357,870

23,817

7%

43

Washington

3,144,952

171,914

5%

44

Nevada

1,243,552

52,939

4%

45

Wyoming

269,357

9,564

4%

46

South Dakota

385,157

11,364

3%

47

Tennessee

2,794,712

80,685

3%

48

Florida

8,910,654

241,766

3%

49

Texas

10,784,887

244,373

2%

50

United States

141,458,638

34,911,115

25%

Table 4. State/Local Income Tax Deductions as Percentage of State AGI, 2009

State

AGI (thousands)

Amount of Income Tax Deducted

% of AGI

Rank

New York

$602,715,414

$36,662,094

6.1%

1

Maryland

$183,270,842

$10,109,347

5.5%

2

California

$996,255,774

$47,226,396

4.7%

3

District of Columbia

$23,248,705

$1,222,580

5.3%

3

Oregon

$85,985,693

$4,072,541

4.7%

4

Connecticut

$135,992,688

$6,136,564

4.5%

5

New Jersey

$299,573,872

$13,076,205

4.4%

6

Minnesota

$145,272,483

$5,933,338

4.1%

7

Massachusetts

$217,427,330

$8,693,696

4.0%

8

Wisconsin

$139,548,333

$5,498,462

3.9%

9

North Carolina

$201,872,716

$7,906,998

3.9%

10

Virginia

$234,321,329

$8,474,600

3.6%

11

Maine

$29,156,528

$1,052,425

3.6%

12

Rhode Island

$27,102,430

$977,989

3.6%

13

Kentucky

$84,008,606

$3,003,576

3.6%

14

Ohio

$257,359,400

$8,683,793

3.4%

15

Georgia

$211,990,964

$7,128,103

3.4%

16

Hawaii

$33,438,301

$1,117,306

3.3%

17

Idaho

$29,903,301

$997,034

3.3%

18

Utah

$58,507,710

$1,919,396

3.3%

19

South Carolina

$91,092,430

$2,971,172

3.3%

20

Delaware

$23,454,311

$752,935

3.2%

21

Kansas

$68,320,734

$2,132,346

3.1%

22

Iowa

$69,594,645

$2,076,026

3.0%

23

Vermont

$15,391,243

$455,680

3.0%

24

Montana

$21,250,414

$622,474

2.9%

25

Missouri

$131,801,960

$3,838,068

2.9%

26

Nebraska

$42,705,522

$1,240,308

2.9%

27

Arkansas

$54,627,697

$1,583,598

2.9%

28

Pennsylvania

$324,848,944

$9,282,945

2.9%

29

Colorado

$137,052,679

$3,818,162

2.8%

30

Mississippi

$51,046,523

$1,369,496

2.7%

31

Michigan

$218,495,392

$5,616,785

2.6%

32

Indiana

$138,570,251

$3,545,285

2.6%

33

West Virginia

$34,933,974

$859,081

2.5%

34

Oklahoma

$77,280,743

$1,887,258

2.4%

35

Arizona

$135,328,404

$3,044,931

2.3%

36

Alabama

$95,601,574

$2,115,105

2.2%

37

Louisiana

$96,308,288

$2,074,033

2.2%

38

Illinois

$350,438,403

$7,184,095

2.1%

39

New Mexico

$40,772,124

$800,714

2.0%

40

North Dakota

$16,662,417

$225,141

1.4%

41

New Hampshire

$39,360,849

$427,618

1.1%

42

Nevada

$67,548,185

$322,515

0.5%

43

Florida

$452,703,287

$2,142,516

0.5%

44

Wyoming

$16,035,428

$74,778

0.5%

45

Washington

$186,216,727

$717,763

0.4%

46

Tennessee

$130,485,371

$430,998

0.3%

47

South Dakota

$18,983,043

$58,182

0.3%

48

Texas

$588,289,807

$1,253,727

0.2%

49

Alaska

$20,209,830

$26,664

0.1%

50

United States

$7,801,040,718

$243,410,355

3.1%

Table 5. Percentage of Taxpayers Deducting State and/or Local Sales Taxes, 2009

State

Number of returns

State and local general sales tax: Returns Claiming Deduction

% of total

Rank

Washington

3,144,952

848,756

27%

1

Nevada

1,243,552

316,038

25%

2

Florida

8,910,654

1,967,191

22%

3

Texas

10,784,887

2,109,412

20%

4

Tennessee

2,794,712

526,687

19%

5

Wyoming

269,357

49,619

18%

6

South Dakota

385,157

56,999

15%

7

Arizona

2,670,661

240,670

9%

8

Alaska

357,870

24,899

7%

9

New Jersey

4,236,533

257,376

6%

10

California

16,384,130

898,505

5%

11

Mississippi

1,241,390

66,945

5%

12

Illinois

6,008,183

299,722

5%

13

Idaho

657,773

32,350

5%

14

Alabama

2,048,831

92,913

5%

15

Kansas

1,310,164

57,163

4%

16

Georgia

4,447,966

192,664

4%

17

Colorado

2,331,974

98,642

4%

18

Michigan

4,534,729

185,781

4%

19

Hawaii

648,846

25,530

4%

20

Oklahoma

1,585,616

62,179

4%

21

North Dakota

322,972

12,637

4%

22

Utah

1,124,569

43,075

4%

23

New Mexico

912,316

34,593

4%

24

New York

9,116,699

337,729

4%

25

Connecticut

1,711,715

61,432

4%

26

Arkansas

1,211,644

42,798

4%

27

North Carolina

4,144,875

145,512

4%

28

South Carolina

2,024,495

69,840

3%

29

Louisiana

1,960,107

64,131

3%

30

Nebraska

846,101

27,131

3%

31

Missouri

2,683,562

79,606

3%

32

Iowa

1,392,004

39,765

3%

33

Kentucky

1,841,152

48,560

3%

34

Pennsylvania

6,058,513

156,888

3%

35

Minnesota

2,541,797

65,380

3%

36

Virginia

3,685,674

92,548

3%

37

Rhode Island

501,586

12,200

2%

38

Maryland

2,751,233

65,095

2%

39

Wisconsin

2,728,034

63,681

2%

40

Ohio

5,409,661

119,171

2%

41

Maine

624,567

13,692

2%

42

Vermont

316,053

6,323

2%

43

District of Columbia

312,067

6,351

2%

43

Massachusetts

3,171,888

60,359

2%

44

Indiana

2,951,362

37,972

1%

45

West Virginia

778,130

7,782

1%

46

New Hampshire

659,001

3,694

1%

47

Delaware

420,472

1,405

0%

48

Montana

472,039

1,542

0%

49

Oregon

1,732,774

4,993

0%

50

United States

141,458,638

10,193,380

7%

Table 6. State/Local Sales Tax Deductions as Percentage of State AGI, 2009

State

AGI (thousands)

Amount of Sales Tax Deducted (thousands)

% of AGI

Rank

Washington

$186,216,727

$1,815,054

0.97%

1

Tennessee

$130,485,371

$1,099,088

0.84%

2

Texas

$588,289,807

$3,975,121

0.68%

3

Nevada

$67,548,185

$456,216

0.68%

4

Florida

$452,703,287

$2,569,025

0.57%

5

South Dakota

$18,983,043

$80,480

0.42%

6

Wyoming

$16,035,428

$59,362

0.37%

7

Arizona

$135,328,404

$299,638

0.22%

8

Mississippi

$51,046,523

$96,442

0.19%

9

Alaska

$20,209,830

$26,470

0.13%

10

Alabama

$95,601,574

$121,720

0.13%

11

Louisiana

$96,308,288

$118,077

0.12%

12

Arkansas

$54,627,697

$65,824

0.12%

13

California

$996,255,774

$1,160,294

0.12%

14

Idaho

$29,903,301

$34,688

0.12%

15

Illinois

$350,438,403

$400,041

0.11%

16

New Mexico

$40,772,124

$46,420

0.11%

17

Oklahoma

$77,280,743

$86,740

0.11%

18

Kansas

$68,320,734

$73,527

0.11%

19

Utah

$58,507,710

$52,308

0.09%

20

Georgia

$211,990,964

$185,557

0.09%

21

New York

$602,715,414

$484,621

0.08%

22

Colorado

$137,052,679

$110,020

0.08%

23

New Jersey

$299,573,872

$239,736

0.08%

24

Michigan

$218,495,392

$165,024

0.08%

25

Missouri

$131,801,960

$98,414

0.07%

26

South Carolina

$91,092,430

$67,678

0.07%

27

North Carolina

$201,872,716

$147,077

0.07%

28

Hawaii

$33,438,301

$24,304

0.07%

29

Nebraska

$42,705,522

$29,754

0.07%

30

North Dakota

$16,662,417

$11,383

0.07%

31

Iowa

$69,594,645

$38,659

0.06%

32

Ohio

$257,359,400

$137,343

0.05%

33

Kentucky

$84,008,606

$42,959

0.05%

34

Pennsylvania

$324,848,944

$157,437

0.05%

35

Minnesota

$145,272,483

$62,494

0.04%

36

Wisconsin

$139,548,333

$59,942

0.04%

37

Virginia

$234,321,329

$99,385

0.04%

38

Rhode Island

$27,102,430

$10,445

0.04%

39

Vermont

$15,391,243

$5,867

0.04%

40

Connecticut

$135,992,688

$49,656

0.04%

41

Indiana

$138,570,251

$46,646

0.03%

42

Maryland

$183,270,842

$56,538

0.03%

43

Maine

$29,156,528

$8,142

0.03%

44

District of Columbia

$23,248,705

$7,136

0.03%

44

West Virginia

$34,933,974

$8,682

0.02%

45

Massachusetts

$217,427,330

$40,603

0.02%

46

Oregon

$85,985,693

$8,621

0.01%

47

Delaware

$23,454,311

$2,268

0.01%

48

Montana

$21,250,414

$1,916

0.01%

49

New Hampshire

$39,360,849

$3,000

0.01%

50

United States

$7,801,040,718

$15,287,544

0.20%

Table 7. Percentage of Taxpayers Deducting Either Tax, 2009

State

Number of Return

Returns Deducting Either Tax

% of total

Rank

Maryland

2,751,233

1,327,100

48%

1

Connecticut

1,711,715

738,437

43%

2

New Jersey

4,236,533

1,826,769

43%

3

Virginia

3,685,674

1,475,426

40%

4

Massachusetts

3,171,888

1,253,846

40%

5

District of Columbia

312,067

124,150

40%

5

Minnesota

2,541,797

994,684

39%

6

Utah

1,124,569

437,274

39%

7

Colorado

2,331,974

893,895

38%

8

Oregon

1,732,774

635,680

37%

9

California

16,384,130

5,963,469

36%

10

Rhode Island

501,586

181,172

36%

11

New York

9,116,699

3,276,453

36%

12

Georgia

4,447,966

1,583,448

36%

13

Wisconsin

2,728,034

960,924

35%

14

Arizona

2,670,661

925,156

35%

15

Delaware

420,472

143,526

34%

16

North Carolina

4,144,875

1,409,078

34%

17

Illinois

6,008,183

2,022,166

34%

18

Idaho

657,773

213,914

33%

19

Washington

3,144,952

1,020,670

32%

20

Michigan

4,534,729

1,431,456

32%

21

Hawaii

648,846

204,597

32%

22

Ohio

5,409,661

1,642,043

30%

23

Iowa

1,392,004

420,742

30%

24

South Carolina

2,024,495

609,932

30%

25

Maine

624,567

187,550

30%

26

Pennsylvania

6,058,513

1,817,441

30%

27

Missouri

2,683,562

799,732

30%

28

Kansas

1,310,164

390,200

30%

29

Nevada

1,243,552

368,977

30%

30

Nebraska

846,101

248,727

29%

31

Vermont

316,053

92,142

29%

32

Alabama

2,048,831

587,385

29%

33

Kentucky

1,841,152

520,482

28%

34

Montana

472,039

130,245

28%

35

Indiana

2,951,362

789,179

27%

36

Oklahoma

1,585,616

420,796

27%

37

New Mexico

912,316

228,702

25%

38

Florida

8,910,654

2,208,957

25%

39

Arkansas

1,211,644

292,389

24%

40

Louisiana

1,960,107

464,031

24%

41

Mississippi

1,241,390

290,006

23%

42

Wyoming

269,357

59,183

22%

43

Texas

10,784,887

2,353,785

22%

44

Tennessee

2,794,712

607,372

22%

45

North Dakota

322,972

62,556

19%

46

West Virginia

778,130

140,832

18%

47

South Dakota

385,157

68,363

18%

48

New Hampshire

659,001

104,829

16%

49

Alaska

357,870

48,716

14%

50

United States

141,458,638

45,104,495

32%

Table 8. Combined Deductions as Percentage of AGI

State

AGI (thousands)

Total Amount of Either Tax Deducted (thousands)

% of total

Rank

New York

$602,715,414

$37,146,715

6.2%

1

Maryland

$183,270,842

$10,165,885

5.5%

2

California

$996,255,774

$48,386,690

4.9%

3

District of Columbia

$23,248,705

$1,229,716

5.3%

3

Oregon

$85,985,693

$4,081,162

4.7%

4

Connecticut

$135,992,688

$6,186,220

4.5%

5

New Jersey

$299,573,872

$13,315,941

4.4%

6

Minnesota

$145,272,483

$5,995,832

4.1%

7

Massachusetts

$217,427,330

$8,734,299

4.0%

8

North Carolina

$201,872,716

$8,054,075

4.0%

9

Wisconsin

$139,548,333

$5,558,404

4.0%

10

Virginia

$234,321,329

$8,573,985

3.7%

11

Rhode Island

$27,102,430

$988,434

3.6%

12

Maine

$29,156,528

$1,060,567

3.6%

13

Kentucky

$84,008,606

$3,046,535

3.6%

14

Idaho

$29,903,301

$1,031,722

3.5%

15

Georgia

$211,990,964

$7,313,660

3.4%

16

Ohio

$257,359,400

$8,821,136

3.4%

17

Hawaii

$33,438,301

$1,141,610

3.4%

18

Utah

$58,507,710

$1,971,704

3.4%

19

South Carolina

$91,092,430

$3,038,850

3.3%

20

Kansas

$68,320,734

$2,205,873

3.2%

21

Delaware

$23,454,311

$755,203

3.2%

22

Iowa

$69,594,645

$2,114,685

3.0%

23

Arkansas

$54,627,697

$1,649,422

3.0%

24

Vermont

$15,391,243

$461,547

3.0%

25

Missouri

$131,801,960

$3,936,482

3.0%

26

Nebraska

$42,705,522

$1,270,062

3.0%

27

Montana

$21,250,414

$624,390

2.9%

28

Pennsylvania

$324,848,944

$9,440,382

2.9%

29

Mississippi

$51,046,523

$1,465,938

2.9%

30

Colorado

$137,052,679

$3,928,182

2.9%

31

Michigan

$218,495,392

$5,781,809

2.6%

32

Indiana

$138,570,251

$3,591,931

2.6%

33

Oklahoma

$77,280,743

$1,973,998

2.6%

34

West Virginia

$34,933,974

$867,763

2.5%

35

Arizona

$135,328,404

$3,344,569

2.5%

36

Alabama

$95,601,574

$2,236,825

2.3%

37

Louisiana

$96,308,288

$2,192,110

2.3%

38

Illinois

$350,438,403

$7,584,136

2.2%

39

New Mexico

$40,772,124

$847,134

2.1%

40

North Dakota

$16,662,417

$236,524

1.4%

41

Washington

$186,216,727

$2,532,817

1.4%

42

Tennessee

$130,485,371

$1,530,086

1.2%

43

Nevada

$67,548,185

$778,731

1.2%

44

New Hampshire

$39,360,849

$430,618

1.1%

45

Florida

$452,703,287

$4,711,541

1.0%

46

Texas

$588,289,807

$5,228,848

0.9%

47

Wyoming

$16,035,428

$134,140

0.8%

48

South Dakota

$18,983,043

$138,662

0.7%

49

Alaska

$20,209,830

$53,134

0.3%

50

United States

$7,801,040,718

$258,697,899

3.3%


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