Senate Minority Leader Charles E. Schumer and US Rep Tom Suozzi (D-Huntington), unveiled a plan this week to repeal the cap on the state and local tax (SALT) deduction on federal income taxes.
The repeal is part of the upcoming federal COVID-4 stimulus package being negotiated in the Senate.
Suozzi, who passed legislation to restore the SALT deduction in the House-passed Heroes Act, has been pushing to restore the SALT deduction in the 2017 tax bill.
The SALT deduction previously allowed taxpayers to deduct local tax payments on their federal tax returns. The cap limited the SALT deduction to $10,000, which in a high-tax state such as New York, left many property holders in the hole.
“When it comes to SALT, if you think Long Islanders needed and deserved this money before the coronavirus took hold, the stakes are even higher now because the cap is costing this community tens-of-thousands of dollars they could be using amid the crisis,” Schumer said. “That is why I am announcing, I will push to insert language the House passed, and Rep. Suozzi here authored, to restore our full SALT deduction in the upcoming coronavirus legislation under negotiation right now. We need to bring our federal dollars back home and cushion the blow this virus –and this harmful SALT cap–has dealt so many homeowners and families locally.”
“The cap on SALT deductions has been a body blow to New York families,” Suozzi said. “The full SALT deduction must be restored. Without the full SALT deduction families will leave New York and the last thing we need in the midst of the health and economic devastation of coronavirus is to lose our residents and taxpayers.”
At a House Ways and Means Committee hearing last year, Suozzi noted:
• New Yorkers subsidizes other states by paying $36-45 billion more in taxes than
the state receives back from the federal government;
• The repeal of the SALT deduction results in double taxation by imposing federal taxes on
the income used to pay state and local taxes;
• The elimination of the deduction drives wealthier people to other states and leaves
middle- and lower-income taxpayers having to pay for school, police and other
essential state and local tax burdens.