Senate Bill S6502

                                 BILL NUMBER:  S6502

 TITLE OF BILL :  An act to amend the tax law, in relation to
authorizing resident taxpayers, who itemize deductions on their
federal income tax returns, to take a deduction from their federal
adjusted gross income, for purposes of their state personal income
taxes, for real property taxes paid on their primary residence, in the
event such deduction is not allowed on federal income taxes

 PURPOSE :

To ensure that taxpayers will continue to be able to claim an itemized
deduction on their state income tax returns for local property taxes
even if the federal government abolishes the federal itemized
deduction for state and local taxes.

 SUMMARY OF PROVISIONS :

Section one of the bill amends subsection (d) of section 615 of the
tax law by adding a new paragraph 6 that allows filers to take a New
York itemized deduction for property taxes paid on their primary
residence in the State if such taxes can't be deducted through a
federal itemized deduction.

Section two sets an effective date.

              

 JUSTIFICATION :

The federal tax code currently allows taxpayers to deduct State and
local taxes, including either income or sales taxes, and real property
taxes, including property taxes paid on their homes, from their income
if they choose to itemize their deductions. New York taxpayers are
able to claim several itemized deductions on their state income tax
returns if they claimed itemized deductions on their federal taxes,
including the deduction for state and local taxes. For New York
purposes, the deduction is modified by removing any amounts claimed on
personal income or sales taxes, leaving the amount of real property
taxes paid for one's primary residence.

The new administration in Washington has announced its intention to
make significant changes to the tax code, including possibly ending
the itemized deduction for State and Local taxes. This change would
impose a heavy new tax burden on New Yorkers. Over a third of New York
state filers claim this itemized deduction on their federal returns,
with the average deduction in 2014, the last year for which detailed
data exists, being $21,000. A report by Governor Cuomo's office in
2013 estimated that based on 2010 numbers, eliminating this deduction
would increase federal taxes on New Yorkers by $14.8 billion.

Eliminating the state and local tax itemized deduction at the federal
level has implications for homeowners state level deductions.
Currently, taxpayers can deduct their property taxes on their state
income tax return if they itemize their deductions, but only if they
have claimed the federal itemized deduction first. If the federal
itemized deduction were to be repealed, then state taxpayers would no
longer be able claim an itemized deduction for their property taxes on
their state return. This would mean an increase in taxes of at least
$704 million for New Yorkers.

This legislation is designed to prevent that outcome by creating a
state level deduction for property taxes paid for real estate taxes
levied on one's primary residence that can only be claimed if no
federal deduction for the same taxes exists. In this way taxpayers
will be able to continue to deduct their property taxes on their New
York returns even if the federal government eliminates their own
itemized deduction.
 LEGISLATIVE HISTORY :

This is a new bill

 FISCAL IMPLICATIONS :

The legislation ensures that existing tax practices continue in the
case of certain changes to the federal tax code, so there is no
additional cost to the state.

 EFFECTIVE DATE :
This act shall take effect immediately