Analysts fear that new tax rules could cost New Yorkers $68B in lost tax breaks. Long Islanders could be hardest hit under these proposals. So, what will it really cost you? What should you do about it?
Coverage by Syracuse.com suggests that proposed changes by Paul Ryan (House Speaker) and Donald Trump (President-elect) will eliminate or dramatically scale back tax breaks, to the tune of almost $70B, just in NY. As one of the biggest changes in a century, the new rules would take away the ability for taxpayers to deduct state and local income taxes, and property taxes, from their federal tax returns. Syracuse.com poses that would rocket your federal income tax bill by about 30%. California, New Jersey, and Illinois could also be hit hard, but Long Islanders will bear the burnt with the biggest hit. That’s expected to be an average of around $8,000 to $11,000 per year in Nassau and Suffolk County. Many will obviously pay far more.
Of course, in the bigger picture; it is expected that larger tax plans should eventually reduce the overall tax burden. Yet, we’ll just have to wait to see what becomes law, and how it plays out. There are no guarantees. So, what can you do to limit your exposure to a massive tax bill jump?
Given the elimination of the property tax break this means even more urgency and motivation to stop overpaying flawed local property tax bills. Grieve and challenge your property tax bill now, and slash what you owe. You may also want to restructure your assets and income, and especially your investment property portfolio, and residency status before the end of the year. If only the first part of these tax changes are enacted there will be clear advantages for those filing as residents and property owners in states with lower property taxes, or with no state and local income taxes, like Florida.