These 7 favorite tax breaks are on the chopping block

by: Dan Caplinger

Despite their well-known tendencies to procrastinate, American taxpayers always like to have at least some sense of what they’re likely to owe on their tax returns. Unfortunately, the government doesn’t always provide those answers in a timely fashion, and this year, they’re going down to the wire in deciding the fate of seven of the favorite tax breaks that Americans want to use in order to reduce the amount they have to pay to the IRS next April.

Several popular tax provisions expired at the end of last year, making their fate for the current 2014 tax year uncertain. The measures are largely ones that require renewal every year, with lawmakers choosing to extend their availability for only a single year at a time to avoid bearing the full long-term budgetary cost of the provisions at any one time. With the midterm elections having made it hard to make forward progress on legislation to extend these provisions, it’s up to a potential lame-duck session of Congress to work on restoring the tax breaks — or affirmatively allowing them to go away once and for all. Let’s take a look at seven of the most popular provisions that will disappear without intervention from lawmakers.

1. Deduction for State and Local Sales Taxes

When enacted in 2004, the deduction for state and local sales taxes made the tax system fairer for those who live in states that don’t impose a state-level income tax. Under this provision, you can choose to deduct state and local sales taxes instead of income taxes, picking whichever one is more favorable to you. Moreover, you don’t have to keep track of every penny you pay in sales taxes, as the IRS allows you to use a chart that estimates the typical sales-tax expenditure for families with various levels of income. Failure to restore this provision will hurt taxpayers in Texas, Florida and several other states in which residents pay no or minimal income tax.

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