The lame-duck congress finally compromised on its final tax billl of the term. The tax bill, which will cost $38 billion over five years, includes the important extension for sales-tax deduction for two more years, and it is especially important for those living in states with no income taxes (namely Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming).

On the other hand, this Christmas will be very messy for IRS and those working in the tax industry as they have to deal with the last minute tax law changes in tax year 2006.

The Senate early today joined the House in approving a package that allows Washington residents to deduct state and local sales taxes from their federal income taxes for two more years.

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The deduction expired at the end of last year and wouldn't have been available this next tax season without congressional action.

The measure affects eight states, including Washington and Alaska, that don't levy a personal income tax.

The extension could save Washington families about $500 a year each in federal taxes; the total was about $355 million in 2004.

The sales-tax deduction was included in a complicated piece of legislation containing dozens of other tax measures, a phenomenon in Congress known as a Christmas tree bill because of all the proposals attached to it.

It passed the House 367-45. All members of the Washington delegation voted for the legislation that included the sales-tax deduction. The Senate cleared the bill for President Bush's signature early today by a 79-9 vote.

The landslide votes reflected widespread bipartisan support for extending other tax breaks, including the research-and-development tax credit for businesses, the tax deduction on college tuition, a tax credit for hiring welfare recipients and others facing difficulties finding jobs, and tax credits for alternative-energy producers and purchases of solar energy equipment by homeowners and businesses.

All told, the tax cuts will cost $38 billion over five years.