What new trends and regulations may impact your tax bills?
There are a variety of new trends and tax law changes which could make a difference in how much you pay in the years ahead. More changes and tax reforms are being debated right now, but this is what we know…
Lower Personal Income Tax Rates
Perhaps the only great news among these tax changes is a reduction in income taxes. The New York state budget signed into law on April 10th by Governor Andrew Cuomo, calls for a declining rate of personal income taxes. Those earning between $40K to $150k per year will see their tax rate reduce gradually over the next 7 years from 6.45% to 5.5%. Those earning between $150k to $300k per year will see their tax rate fall to 6% by 2025. Unless of course someone else comes along and changes that first.
Limits on Breaks for Charitable Deductions
At least until the end of 2019, New York residents with an adjusted gross income of between $1M and $10M can only deduct 50% of their charitable contributions. Those earning over $10M per year, are limited to a 25% deduction.
Taxes on Business Partnerships
Effective as of April 2017, there are new rules for selling interests in partnerships. This qualifies as the sale of intangible assets, though other rules may be triggered if property sold is worth at least 50% of the partnerships’ assets. Other business tax rules focus on non-captive REITs and reinsurance companies, mortgages, and a retroactive tax change for all years for Single member LLCs.
Dodge Data & Analytics reports that the value of construction contracts in the New York area, including Long Island, rose 17% in July 2017 to $2.9 billion. Ongoing rapid building may provide some minor temporary easing for renters. However, it is also likely to push up property taxes for home, condo, and co-op owners.
A variety of factors are likely to impact many Long Islanders’ tax bills over the next seven years. Some of the above rules could be changed by new laws. Yet, overall, most should brace for increasing taxes, unless major reform is instituted. There isn’t a lot most local property owners can do about these rules, except for voting. The exception is property taxes, which can be challenged and lowered with the help of Long Island based Property Tax Adjusters, Ltd.