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American Jobs Creation Act of 2004
Adds Federal Tax Deduction
for Texas State and Local Sales Taxes

Act of Congress follows blueprint from Comptroller Strayhorn's plan presented in March 2002 and June 2004.

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The vision for which Comptroller Strayhorn worked for over two years has finally been realized in an act of Congress, H.R. 4520, the American Jobs Creation Act of 2004. This bill was sent by Congress to the President today, October 11, 2004.

How Texas wins:

  • Texans will save an average of $408 per itemizing household, or $974 million overall, on their federal taxes next year. Similar savings could occur in subsequent years, but only if Congress extends the deduction beyond the two-year period in H.R. 4520.
  • The estimated tax savings are expected to generate 21,798 new Texas jobs, $819 million in new Texas investment, and $1.2 billion in increased Gross State Product in 2005.
  • The increased economic activity should also boost general revenue-related state tax receipts for the two-year period 2005-06 by $49.7 million.
  • Texas families will be able to deduct their actual sales taxes paid by saving their receipts, or by looking up an average amount for their income and family size on a table, plus any actual taxes paid on motor vehicles and boats.
  • For example, to calculate taxable income, a family of four with income of $57,945 that purchased an $18,000 car this year without a trade-in should be able to deduct an additional $1,918 (an estimated $793 from a general sales tax table and $1,125 in actual motor vehicle sales taxes paid).
  • Likewise, a single mother of one with an income of $34,500 who purchased a used car for $10,000 should be able to deduct an additional $1,128 (an estimated $503 from the general sales tax table and $625 in actual motor vehicle sales taxes paid).

The new law corrects a provision that for 18 years discriminated against Texans and the citizens of seven other states that levy sales taxes rather than personal income taxes. This provision of the American Jobs Creation Act of 2004 restores fairness and equity for those state taxpayers who currently do not benefit from the tax deductions enjoyed by the citizens of 41 other states and the District of Columbia.