Washington, D.C. – On the heels of passing landmark Wall Street reform legislation last week in the U.S. Senate to establish new rules of the road to protect taxpayers and consumers, U.S. Senator Kirsten Gillibrand is now pushing to pass a series of tax initiatives to help hardworking, middle class families save on property taxes, sales taxes and college tuition. The new legislation is expected to pass this week.
“New Yorkers pay some of the highest taxes in the nation,” Senator Gillibrand said. “After two years of the worst financial crisis since the Great Depression, middle class families in New York deserve relief. From easing the burden of property taxes and income taxes, to bringing higher education within reach to more New York students, this legislation will make life more affordable for New York’s hardworking middle class families.”
Statewide, New York households could save approximately $975 million on property taxes, taxpayers could deduct approximately $540 million on their federal income taxes, and up to 1.5 million college-age students could benefit.
READ the full county-by-county report on how much New York’s middle class families would benefit from extending the tax deductions.
Property Tax Deduction
Senator Gillibrand introduced bipartisan legislation last year that would expand and make permanent federal property tax relief for New Yorkers who do not itemize their federal tax deductions. The enhanced deduction would ensure permanent tax relief for up to 30 million homeowners across the country.
Before 2008, only taxpayers who itemized their deductions could claim a deduction for state and local property taxes. The Housing and Economic Recovery Act that Congress passed in 2008 temporarily allowed non-itemizing taxpayers to deduct their property taxes. However, this deduction was capped at only $500 and expired at the end of 2009.
Senator Gillibrand’s is pushing to pass legislation that would lift the caps and make the property tax relief permanent. This week, the Senate will take up legislation to extend the enhanced credit for an additional year.
State and Local Sales Tax Deduction
To help ease the burden of rising sales taxes in New York, Senator Gillibrand is pushing to extend taxpayers’ ability to choose to deduct state and local sales taxes instead of state income taxes. While income taxes for many New Yorkers are likely to be a larger deduction, with many localities are being forced to raise local sales taxes to make up for declining revenues more New Yorkers could benefit from this deduction.
Taxpayers have two ways to claim the deduction: either saving and tallying individual receipts, or by using a simple calculator that estimates your sales taxes paid which is available on the IRS website.
Qualified Tuition Deduction
To help make higher education affordable for New York families, Senator Gillibrand is pushing to extend the deduction for qualified tuition and higher education expenses for one year. This deduction allows all taxpayers to deduct up to $4,000 of qualified higher education expenses from taxation. Qualified expenses include tuition, fees, books and other expenses except for room and board at any accredited post-secondary institution.
This deduction is particularly helpful for part-time students, taxpayers who do not itemize, or taxpayers who will receive additional benefit from reducing their adjusted income, such as remaining eligible for other deductions or tax credits. Many families are also eligible for the American College Opportunity credit, which may provide larger benefits for certain families. Taxpayers should look at both credits and determine which would better reduce their overall tax burden.