Federal authorities want to reduce the tax burden for New Yorkers

Federal lawmakers want to boost tax credits for residents of states with high local taxes, particularly New Yorkers. This will allow residents of the region to save considerable amounts. Although these are only plans for now, there is no single bill on this matter yet, writes SLive.

Americans pay federal, state, and local taxes (county or city, if applicable). Before filing a federal tax return, a person has the right to deduct from his taxable income the amount of local taxes he paid. For example, if in 2023 he earned $100 and paid $000 in local taxes, then this person must pay federal taxes not on his entire income, but on the remaining amount after deducting local taxes. In our example, this is: $10 - $000 = $100 - this amount of his income will be subject to federal taxes.

There are special tax deductions for this – SALT (state and local tax). With the passage of the new tax law in 2017, the amount of such deductions is limited to $10, even if a person paid $000 in local taxes. This hits hard on the wallets of residents of regions with high local taxes. These rules came into force in 50.

Previously, SALT deductions had no restrictions, and taxpayers could deduct from federal taxable income any amount they paid to local governments. And now federal lawmakers want to return to this option.

On the subject: How to File Your New York Tax Return for Free: Helpful Tools and Resources

The initiative is being promoted by several members of Congress from both parties, but their votes are not yet sufficient to guarantee passage of the bill. Roughly speaking, congressmen from states with high taxes (New York, New Jersey and California) are fighting a difficult battle with their colleagues from other regions, who do not really like the idea of ​​​​changing tax laws again (and even at a loss to the federal budget).

For example, three Republican congressmen from New York, one from California and a Democrat from New Jersey are pushing legislation that would increase SALT limits. At the moment, when filing a return jointly as a couple, you can deduct no more than $10 in local taxes, and when filing an individual return, up to $000. The bill proposes to increase the deduction amounts to $5 and $000, respectively.

Congresswoman Nicole Malliotakis (R-NY) has long advocated for increasing the SALT deduction, and she has said she will support the bill.

“I am for any measure that will reduce taxes for my constituents,” she said. - I will support this bill. We will have a good chance of increasing the SALT deduction in 2025 when the 2017 tax law comes due.”

In late January, the Republican-controlled House passed a bipartisan tax bill that did not address SALT deduction limits, but it stalled in the Democratic-majority Senate. Therefore, different groups of legislators are putting forward their initiatives in the hope that they will be able to agree on amendments to the existing draft or promote their bills separately.