SCHUMER: CURRENT TAX RULES COST UPSTATE NY HOMEOWNERS UNNECESSARY $415 MILLION PER YEAR; INTRODUCES PLAN TO MAKE SKY-HIGH PROPERTY TAX BILLS DEDUCTIBLE FOR EVERYONE
Current Rules Prevent Homeowners Who Don't Itemize From Deducting Their Property Taxes From Their Income Plan Will Save 800,000 Upstate New York Homeowners Hundreds Of Dollars Per Year Schumer: With Sky-High Property Taxes In New York State, New York Homeowners Deserve a Break
"Across the state and across the country middle class families are up to their necks in property taxes, and all homeowners, no matter how they file their taxes, deserve relief," said Schumer. "This legislation is particularly important at a time of financial uncertainty it will free up money that can be saved or spent on our families, and give people everywhere a little bit more breathing room."
Prior to 2008, only taxpayers who itemized - about 30 percent of taxpayers nationally could claim a deduction for state and local income taxes and local property taxes. The Housing and Economic Recovery Act of 2008 included a provision that allowed nonitemizers to deduct up to $500 ($1,000 for joint filers) of their property taxes. The special deduction was available for the 2008 tax year but was subsequently extended through 2009 as part of the Troubled Asset Relief Program. This was welcomed relief for many of the 800,000 families in Upstate New York who do not itemize, but the provision expires at the end of this year.
The property tax legislation that Schumer is pushing, The Homeowner Tax Fairness Act, will make the deduction permanent and has no cap - a homeowner will be allowed to deduct the full amount of their property taxes from their federal tax bill. Seventy percent of taxpayers do not itemize - 800,000 of whom are homeowners in Upstate New York. With property taxes rising and homeownership threatened in many communities around the country, middle class families should not be penalized simply because they do not itemize.
The Homeowner Tax Fairness Act, introduced by Senators Evan Bayh (DIN) and Mel Martinez (RFL), would immediately lift the caps on what families can deduct and make this new, enhanced deduction permanent. Any property taxpayer who does not itemize and pays more than $500 a year in property taxes will be eligible for the enhanced deduction starting this year. Families who are under the cap will see a benefit starting next year.
Here is how the numbers breakdown around the state:
- In the Capital Region 101,000 homeowners could save on average $435 per year, for a total regional savings of $44 million.
- In Central New York 100,000 homeowners could save on average $375 per year, for a total regional savings of $38 million.
- In the Hudson Valley 212,000 homeowners could save on average $900 per year, for a total regional savings of $190 million.
- In the North Country 55,000 homeowners could save on average $260 per year, for a total regional savings of $14 million.
- In the RochesterFinger Lakes Region 114,000 homeowners could save on average $485 per year, for a total regional savings of $55 million.
- In the Southern Tier 67,000 homeowners could save on average $290 per year, for a total regional savings of $20 million.
- In Western New York 153,000 homeowner could save on average $390 per year, for a total regional savings of $61 million.
Here are some examples of how people will be affected by this legislation:
- A nonitemizing family with $75,000 of taxable income and a $3,000 property tax bill would receive a $800 tax cut next year
- A nonitemizing single taxpayer with $50,000 of taxable income and a $2,000 property tax bill would receive a $500 tax cutnext year.
- A nonitemizing senior citizen on a fixed income of $35,000 per year and a $1,500 property tax bill would see a $300 tax cutnext year .
Every taxpayer who pays federal taxes must decide whether to take the standard deduction or to itemize their deductions. Taxpayers who itemize do so because they are eligible for deductions that cumulatively provide a greater tax benefit than the standard deduction ($5,700 for single filers and $11,400 for married couples in 2009). The deduction provided by Schumer's legislation will be on top of the standard deduction taken by filers who do not itemize. Roughly onethird of taxpayers itemize.
The source for all data is the Tax Foundation, U.S. Census, and Schumer staff calculations.
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