News broke on the morning of December 27th that President Donald J. Trump had signed into law the Tax Cuts and Jobs Act of 2017 that will reduce taxes for both families and businesses.
Sounds great! Don’t get your hopes up. The law contains stipulations that limit federal deductibility of state and local taxes in future filings. How consequential? If you live in Nassau County, using information provided by the IRS, state and local deductions (SALT) currently average $23,500, the highest of any county in the United States. While capped at $10,000, taxpayers with more expensive property, generally those who live in higher-income areas, higher taxes, will be short-sheeted.
Morris Peters, a spokesman for the NYS Division of the Budget, mentioned the state Senate unanimously approved a bill (S.6974) that would resolve conformity issues by simply coupling the state tax code to the federal code prior to enactment of the new federal law.
Peters also mentioned a second bill (S.6951) which would create a state tax credit equal to any increase in tax liability resulting from the federal law.
Of interest. In Minnesota, the state estimates that their residents could pay more than $400 million in additional state taxes in the next fiscal year. Their Democratic state Governor Mark Dayton has a plan. He wants to give most of the money back to Minnesotans through tax cuts aimed at low-and moderate income families; the Republican-controlled legislature wants broader-based tax cuts.
It’s a gotcha. Less, is more!