Just days into the new Congressional session, Congresswoman Nita Lowey (D-Harrison), Chairwoman of the House Appropriations Committee, and Congressman Peter King (R-Seaford, Long Island), introduced the Securing Access to Lower Taxes by ensuring Deductibility Act of 2019, or SALT Deductibility Act, a bi-partisan bill to fully restore the state and local tax (SALT) deduction.
The move is in response to the Trump Administration Tax Cuts and Jobs Act signed into law in December 2017, which according to critics will cause many New Yorkers, in particular those living in the Metropolitan suburbs, much financial pain as they prepare their 2018 federal tax returns.
The SALT (state and local tax) deduction has been a major source of tax fairness for high cost of living and high tax states such as New York.
In Westchester, 45% of residents depend on the SALT deduction at an average of $25,000 annually, making the $10,000 cap for local and state taxes and income tax as dictated by the new tax law an unfair burden.
King, who represents Long Island residents in Suffolk and Nassau counties, has joined Lowey in the bi-partisan fight, with constituents experiencing the same financial burdens as those in Westchester.
“Repealing the SALT deduction was a callous move designed to target New York taxpayers, who are taxed enough as is. That’s why I’m proud to reintroduce my bill,” said Congresswoman Lowey. “Protecting this deduction is more important than ever with the Trump Administration’s continued assault on the middle class. Our bill ensures that New York families see tax relief, not more tax burdens.”
“Eliminating deductions for local and state taxes, the tax reform plan will have a devastating effect on New York,” said Congressman King. “We give far more to Washington then we get back. For every dollar we give, we get $.79 back. That’s a $48 billion shortfall and hurts our middle class Long Islanders. This legislation is critical.”
Prior to enactment of the new federal tax law, New York taxpayers who itemized could deduct their state and local property and income taxes. The SALT deduction was a major source of tax fairness for high-taxed states like New York, where an average of 35 percent of taxpayers deduct more than $22,000 every year.
The SALT Deductibility Act, first introduced in January 2018, would repeal the limit on the SALT deduction, providing tax relief for families who rely on the deduction.
In October 2018, Congresswoman Lowey sent a letter urging IRS Commissioner Charles Rettig to amend a proposed regulation that would prohibit New York and other states from providing much-needed relief for taxpayers by circumventing the $10,000 cap on SALT.
That plan would allow New York residents to make charitable contributions to certain municipal agencies that would make up the difference and ultimately reduce their overall tax bill. The IRS, however, thwarted the attempt by proposing changes to the charitable deductions section of the tax law.
The Coalition for the Charitable Contribution Deduction, spearheaded by Assemblywoman Amy Paulin (D-Scarsdale), is working separately to thwart the IRS changes and is poised to file a federal lawsuit if necessary.
Lowey is urging the IRS to allow taxpayers to fully deduct prepaid 2018 state and local property taxes on their 2017 returns