I'm looking for some rationale for how the sales tax tables change year over year. Have a Texas client.., income in the $300k+ range with 3 family members. In 2018, the state deduction was $2,291. In 2019 it increased to $2,399 but for 2020 it drops to $2,187. The movement varies across different income brackets.
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Look to see if your tax software gives you a breakout of the income (taxable and nontaxable) that it uses to determine the sales tax deduction, and compare the three years you're questioning. -
For one of my clients 2019:
Form 1040, line 8b (adjusted gross income)
Tax-exempt interest
Nontaxable combat pay
Nontaxable part of social security and railroad retirement benefits
Nontaxable part of IRA, pension, or annuity distributions
Additional nontaxable income
= 2019 total available income used in the sales tax deduction calculation
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The previous responses do not address the actual question. The question is not about how the taxpayer's AGI plus non-taxable add-backs might change from year to year. It is about how someone using the optional state sales tax tables, with the exact same income (table row) and family size (table column), in a state like Texas where the sales tax rate did not change, yet the amount given in the table is different from one year to the next, and not even according to any obvious pattern. Some numbers go up, some go down.
These tables are determined by the Secretary under some process cloaked in mystery, much like the annual vehicle standard mileage rate. At least with the mileage rate, we know that things like gasoline prices are a factor. But why would someone with the exact same income and sales tax rate pay more estimated sales tax one year than another, while another taxpayer in the same state would pay less? Are they doing a study as to consumption patterns, at different income levels over time, to say that people bought a higher percent of items subject to tax in one year? In other words, have they determined for example that in one year I would spend 20% of my income on non-taxable food items, but in another year it was only 18%, so my optional deduction amount should go up?
edit: see also Notice 2005-31 for related info, althought it doesn't seem to answer the question of how the tables are created.Last edited by Rapid Robert; 03-16-2021, 08:48 AM."You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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I've been downloading the table from TTB each year. It's under Tools for Tax Pros:Originally posted by FEDUKE404
IRC 164(b)(5)(H)(ii) just instructs the IRS to calculate the tables "based on the average consumption by taxpayers on a State-by-State basis . . . taking into account filing status, number of dependents, adjusted gross income, and rates of State and local general sales taxation". I've never seen any details of how this is calculated each year. One could probably do a FOIA request.
RickComment
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The optional sales tax tables, including worksheets &c. are published each year in the instructions for Schedule A (Form 1040 or 1040-SR), available at the IRS web site.Originally posted by FEDUKE404
"You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe HowardComment
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