ALBANY – Governor Andrew Cuomo Thursday released an analysis outlining the impact of the Republican proposal to eliminate the federal deduction for state and local taxes paid, as part of the GOP’s tax reform package announced by the president and house leaders on Wednesday.
The deduction for state and local taxes paid is the most widely used benefit in the tax code.
The analysis shows that the elimination of state and local tax deductibility will mean that 3.3 million New York taxpayers would see their federal income tax liability increase by $17.5 billion.
If the deductions were to go in effect, they would impact:
- 650,000 state residents making less than $50,000/year by an average of $423,
- 1.16 million state residents making $50,000-$100,000/year by an average of $1,299,
- 686,000 state residents making $100,000-$150,000/year by an average of $2,688.
On average, taxpayers across the state will have to pay $5,300 more in federal income taxes. In Western New York, the average would be $2,967.
According to the governor, existing Federal law that allows taxpayers to deduct their state and local taxes from their federal taxable income has been the law of the land since the Revenue Act of 1862, which created the country’s first income tax.
Congressman Tom Reed (R-Corning, NY 23) said earlier this week that while State and Local Tax deductions may be reduced or eliminated, the new tax code would make up for it by increase the amount of standard deductions available to taxpayers on their annual federal income tax.