SEC. 2. DEDUCTION OF STATE AND LOCAL GENERAL SALES 
TAXES FOR RESIDENTS OF STATES WITH NO 
INCOME TAX. 
(a) IN GENERAL.—Subsection (b) of section 164 of 
the Internal Revenue Code of 1986 (relating to definitions 
and special rules) is amended by adding at the end the 
following: 
‘‘(5) GENERAL SALES TAXES.—For purposes of 
this section—
‘‘(A) DEDUCTION OF STATE AND LOCAL 
SALES TAXES BY RESIDENTS OF STATES IMPOS-
ING NO INCOME TAX.—In the case of an indi-
vidual who is a resident for more than half of 
the taxable year of a State which imposes no in-
come tax on income earned within such State 
by residents of such State and who elects the 
application of this paragraph, subsection (a) 
shall be applied—
‘‘(i) without regard to the reference to 
State and local income taxes, 
‘‘(ii) as if State and local general sales 
taxes were referred to in a paragraph 
thereof, and 
‘‘(iii) without regard to the last sen-
tence.
‘‘(B) DEFINITION
OF
GENERAL
SALES 
TAX.—The term ‘general sales tax’ means a tax 
imposed at one rate with respect to the sale at 
retail of a broad range of classes of items. 
‘‘(C) SPECIAL RULES FOR FOOD, ETC.—In 
the case of items of food, clothing, medical sup-
plies, and motor vehicles—
‘‘(i) the fact that the tax does not 
apply with respect to some or all of such 
items shall not be taken into account in 
determining whether the tax applies with 
respect to a broad range of classes of 
items, and 
‘‘(ii) the fact that the rate of tax ap-
plicable with respect to some or all of such 
items is lower than the general rate of tax 
shall not be taken into account in deter-
mining whether the tax is imposed at one 
rate. 
‘‘(D) 
ITEMS
TAXED
AT
DIFFERENT 
RATES.—Except in the case of a lower rate of 
tax applicable with respect to an item described 
in subparagraph (C), no deduction shall be al-
lowed under this paragraph for any general
sales tax imposed with respect to an item at a 
rate other than the general rate of tax. 
‘‘(E) COMPENSATING USE TAXES.—A com-
pensating use tax with respect to an item shall 
be treated as a general sales tax. For purposes 
of the preceding sentence, the term ‘compen-
sating use tax’ means, with respect to any item, 
a tax which—
‘‘(i) is imposed on the use, storage, or 
consumption of such item, and 
‘‘(ii) is complementary to a general 
sales tax, but only if a deduction is allow-
able under this paragraph with respect to 
items sold at retail in the taxing jurisdic-
tion which are similar to such item. 
‘‘(F) SPECIAL
RULE
FOR
MOTOR
VEHI-
CLES.—In the case of motor vehicles, if the rate 
of tax exceeds the general rate, such excess 
shall be disregarded and the general rate shall 
be treated as the rate of tax. 
‘‘(G) 
SEPARATELY
STATED
GENERAL 
SALES TAXES.—If the amount of any general 
sales tax is separately stated, then, to the ex-
tent that the amount so stated is paid by the 
consumer (other than in connection with the
consumer’s trade or business) to the seller, such 
amount shall be treated as a tax imposed on, 
and paid by, such consumer. 
‘‘(H) AMOUNT OF DEDUCTION TO BE DE-
TERMINED UNDER TABLES.—
‘‘(i) IN
GENERAL.—The amount of 
the deduction allowed under this para-
graph shall be determined under tables 
prescribed by the Secretary. 
‘‘(ii) REQUIREMENTS FOR TABLES.—
The tables prescribed under clause (i)—
‘‘(I) shall reflect the provisions of 
this paragraph, 
‘‘(II) shall be based on the aver-
age consumption by taxpayers on a 
State-by-State basis, as determined by 
the Secretary, taking into account fil-
ing status, number of dependents, ad-
justed gross income, and rates of 
State and local general sales taxation, 
and 
‘‘(III) need only be determined 
with respect to adjusted gross incomes 
up to the applicable amount (as deter-
mined under section 68(b)).’’.
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act.
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