Paul Ryan’s tax plan could cost New Yorkers $68B deduction

Scrapping state and local deduction would hit NYC, California residents hard

TRD New York /
Dec.December 14, 2016 12:35 PM

Paul Ryan and Andrew Cuomo

New Yorkers face a $15 billion net increase in their federal income tax bills if House speaker Paul Ryan’s plan to scrap a key deduction is enacted, according to an estimate by Gov. Andrew Cuomo’s administration.

Ryan has proposed eliminating a rule that allows individuals to deduct state and city taxes, including real estate taxes, from their federal tax bill. The change would affect all 50 states, but would disproportionately hit California and New York because of their large populations and high state and city taxes. New York accounted for 13.2 percent of all deductions claimed in 2013, second only to California (19 percent) and well ahead of New Jersey (5.9 percent) in third place. New Yorkers claimed $68 billion in state and local tax deductions that year.

“The proposals under consideration that would repeal or cap the deduction for state and local taxes would have severe consequences for taxpayers here in New York and across the nation,” Cuomo told Congress back in 2013, when House leaders first proposed scrapping the deduction.

Around 34 percent of New Yorkers who filed federal tax returns in 2014 deducted state and local taxes from their bill, according to the nonpartisan Tax Policy Center.

Taxpayers who file itemized returns would see their tax bill rise by $4,500 on average, according to economists and state officials, New York Upstate reported. According to a Tax Foundation study, Manhattan taxpayers had the highest average deduction for state and local taxes in the nation at $24,652.

Ryan’s plan, published in June, would end the deduction altogether. President-elect Donald Trump, meanwhile, has said he merely wants to make it harder to claim the deduction. He has proposed both raising the minimum deduction taxpayers need to claim to qualify, and adding a $100,000 cap on all deductions for singles and $200,000 for couples.

But other tax cuts could more than make up for the lost deduction, several economists interviewed by New York Upstate said. [UpNY]Konrad Putzier 

Related Article

Senator Brad Hoylman and Billionaires' Row (Credit: StreetEasy, NY Senate)

Pied-à-terre tax to make a return in Albany, lawmakers say

From left: New York Governor Andrew Cuomo, New York State senator James Sanders Jr., and New York City Mayor Bill de Blasio (Credit: Getty Images, iStock, and NY Senate)

“This program will either be a boom or a bust:” State senator has plans to redesign Opportunity Zones

212 Fifth Avenue and Jeff Bezos (Credit: StreetEasy and Getty Images)

June was the best month ever for New York’s luxury market. July is another story.

Margaret Streicker Porres and 101 West 78th Street (Credit: Linkedin, Corcoran, iStock)

Newcastle Realty was repeatedly accused of violating New York’s old rent laws. Now it says it’s leaving New York because of the new rent law.

The lights of The Hard Rock Cafes marquee are out during Midtown’s Saturday blackout (Credit: Getty Images)

Broadway shows, restaurants see major losses from Midtown’s Saturday blackout

The blackout impacted a 42-block stretch of Manhattan between the Hudson River and Fifth Avenue (Credit: Getty Images)

Con Ed still searching for answers in Manhattan blackout