Joe Moshé says that he is relieved that the mortgage interest deduction was retained in President Donald J. Trump’s proposed tax plan, but the deduction for state and local taxes — in particular, Real Estate taxes — is huge for homeowners in highly taxed areas such as Long Island.
According to ATTOM Data Solutions, New York State is one of the top 10 states with the highest property taxes and Nassau County is currently one of nine counties in the nation where property taxes exceed $10,000 a year. New York is also eighth with the highest marginal individual income tax rates among all 50 states, according to The Tax Foundation.
“Assuming a homeowner pays $15,000 in Real Estate taxes each year, at a marginal rate of 25%, they are paying an additional $3,750 in taxes,” he explains. “New York has some of the highest income taxes in the nation. For many homeowners, these taxes exceed their mortgage payments. It would be a crushing blow to the Real Estate market if the state and local tax deductions were done away with.”
President Trump recently announced his plan to reduce taxes across the board, which includes doubling the standard deductions for individuals and married couples and lowering the number of tax brackets from seven to three — at 12%, 25% and 35% — with a possible fourth bracket above 35% that would be decided by the congressional tax writing committee. Although some deductions would be eliminated, the provision that allows homeowners to write off the interest on their mortgage payments will remain intact.
The president said he will leave it to the congressional tax writing committee to decide which other write-offs will be kept and which will be eliminated. With some policy makers seeing a possibility that the state and local tax deductions may be eliminated, members of Congress from high-tax states such as New York have argued against its repeal. The Internal Revenue Service shows that New Yorkers benefit the most from receiving these deductions, making up 9.1% of their adjusted gross income. Joe says this is why the deduction should not be repealed.
“Long Islanders already are among the highest-taxed in the nation,” he says. “Allowing homeowners to write off their state and local taxes — in addition to the interest on their mortgage payments — will provide continued relief to those who are already financially burdened. It is vital that these tax deductions are not eliminated.”
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