New York’s property and income taxes are extraordinarily high and recent changes to the federal tax code could impact those taxpayers who currently have itemized deductions in excess of the new standard deduction. The new standard deduction for the 2018 tax year will be $12,000 for single filers and $24,000 for married couples filing jointly. If your potential deductions are less than the standard deduction, you won’t have to worry about losing deductibility of mortgage interest or state and local taxes. However, if a taxpayer has more potential deductions than the standard deduction, limiting state and local tax deductions to $10,000 could cause higher taxes for such filers.
I joined a bipartisan coalition of my colleagues in introducing legislation to allow individuals who paid any or all of their 2018 property taxes in 2017 to deduct them on their current 2017 tax bill, regardless of when the taxes were assessed.
Due to the speed between passage of tax reform and implementation of the new code, this legislation is a common-sense step that helps all New Yorkers that chose to prepay their property taxes, and ensures they receive the 'deductibility' that they had expected.
The Tax Cuts and Jobs Act, signed into law on December 22, 2017, does not prevent the deductibility of prepaid 2018 state and local property taxes. As a result, many individuals prepaid their entire 2018 property tax liability prior to the IRS Advisory on December 27th.