Did you know you can deduct sales tax. Even on cash transactions. How would you automate sales tax deductions for cash transactions? I always deduct sales tax, because it saves me hundreds of dollars. I always pay cash and ask for receipts from small businesses because paying cash helps them avoid the VISA fee and helps pad their margin. This is one of a dozen things I do on my taxes that I don't see any path forward for automation.
It's not that it's impossible to automate, but do we really want virtually every transaction going to at least 1 state and the federal government. Do we really want every transaction to have both parties identified? I'd rather keep the option of financial privacy open and just do a few hours of paper work every year.
Ok, so the very small percentage of people who take sales tax deduction would have to do that manually, but the rest of their tax return would still be filled in automatically, saving them time and money.
(At any rate, the sales tax deduction is much less useful now with the $10k SALT deduction cap, as well as the increase in the standard deduction. Even if you manage to deduct $10k in sales+property taxes -- deducting state income taxes is disallowed if you deduct state sales tax -- you still need another $2k of deductions to make pass the standard deduction threshold... and that's if you're not married. It's even less useful if you file jointly. Annoyingly, the SALT cap isn't doubled for joint filers. I really hope it expires without extension in 2025...)
This very likely does not make a difference on your total tax bill, especially now that other deductions are limited (like mortgage interest).
Also, even if sales tax paid did make a difference on your tax paid, there is a simple calculator that estimates your sales tax paid that you can use instead of summing sales tax over all transactions.
If you want to play around with different scenarios, I recommend you try the tool "Excel1040" [1]. It is free but consider a donation. Works great in LibreOffice Calc but pay attention to the loading instructions.
Except for people that live in Florida or Texas which doesn't have state income tax. Two of the most populous states. Or 8 other states. It's not uncommon.
Yes, in the US at least, you can deduct state and local taxes from your taxable income. Most people use it to deduct state/local income and property taxes, but you can also deduct the amount of any sales tax paid. (Since 2017, though, there's a $10,000 cap on the total amount of state and local taxes you can deduct. This cap will fortunately expire in 2025 if -- fingers crossed -- it's not renewed.)
The caveat is that if you deduct sales tax, you are then not allowed to deduct state/local income tax. And of course it can be quite a bit more work to keep track of all the sales tax you pay in a year, vs. income tax.
It's not that it's impossible to automate, but do we really want virtually every transaction going to at least 1 state and the federal government. Do we really want every transaction to have both parties identified? I'd rather keep the option of financial privacy open and just do a few hours of paper work every year.