Tax relief sought for US Gulf states hit by spill

* Plan includes tax deferral for payments from BP

* Businesses could apply losses to prior income for cash

By Kim Dixon

WASHINGTON, July 2 (Reuters) - Bipartisan lawmakers on Friday sought tax breaks for mostly small business to help cushion the economic blow from oil still spewing from BP Plc's (BP.L) deep sea well in the Gulf of Mexico.

U.S. senators from Florida, Mississippi and other spill-hit states asked the leaders of the Senate's tax-writing finance committee to back tax relief aimed at boosting economies in states with thousands of workers displaced in the aftermath of the spill.

The plan includes letting small businesses defer taxes on payments received from BP Plc (BP.L). It would also allow losses related to the spill of any fishing or tourism-related business to apply to five years of prior income -- a move that would supply them with immediate cash.

"The long-term challenges posted by the Deepwater Horizon oil spill are difficult to overstate," the group wrote in a letter to Senate Finance Committee Chairman Max Baucus and ranking Republican Charles Grassley. "Tax incentives ... are part of the answer."

The proposals would need need counterparts in the U.S. House of Representatives to become law.

The Senators, including Florida Democrat Bill Nelson and Mississippi Republican Roger Wicker, also want a tax credit of 40 percent for up to $6,000 of first-year wages for employers hiring workers and a tax holiday for visitors to Gulf Coast hotels.

The cost of the plan has not been formally estimated yet, but an aide said the price tag could be about $2 billion over 10 years. (Reporting by Kim Dixon, editing by Gerald E. McCormick)