WASHINGTON -- President Donald Trump and Republican leaders today will detail a tax reform plan that repeals a $1.3 trillion tax break that has become the top federal tax deduction taken by New York residents.
Trump will outline the plan in a speech this afternoon in Indiana, where he'll call for deep cuts to personal and corporate taxes while eliminating the state and local tax deduction, according to senior administration officials.
Residents in the high-tax states of California, New York and New Jersey depend the most on the state and local tax deduction -- accounting for 38 percent of all the state and local taxes deducted nationwide.
New York ranked second among all states for the amount it residents deducted for real estate, income and other state and local taxes, totaling about $68 billion per year, according to the most recent IRS statistics.
Trump's plan, crafted with Republican leaders in Congress, could be a deal-breaker for GOP House members from New York and New Jersey.
Reps. John Katko, R-Camillus, and Claudia Tenney, R-New Hartford, are among seven Republican members of New York's congressional delegation who sent a letter to Treasury Secretary Steven Mnuchin asking him to reconsider plans to eliminate the deduction.
The letter, sent in July, noted that the state and local tax deduction (SALT) has been part of the U.S. tax code since 1913.
"The deduction for state and local taxes matters for all Americans, but it affects New York disproportionately," the letter said. "The state has 3.2 million residents who claim the deduction, and New York's itemizers make up primarily lower- and middle-income households: 85 percent of those who claim the SALT deduction earn less than $200,000 in annual income."
Tenney reiterated her concerns today.
"As I've said from day one, eliminating the federal deduction for state and local taxes will unfairly burden the over 3 million hardworking taxpayers in New York who claim the deduction," Tenney said. "Until New York completely overhauls its tax code, removing this provision will strip primarily middle- and low-income New Yorkers of their only real tax relief."
U.S. Rep. Peter King, R-Long Island, the dean of the Republican delegation in New York, told Bloomberg News that he won't support any bill that repeals the state and local tax deduction.
Katko didn't go that far, but said today he recognizes "the proposed elimination of the state and local tax deduction raises concerns for many New Yorkers. Moving forward, I will carefully evaluate any proposal before the House to determine its impact on my district and the people that I represent."
Trump administration officials say most taxpayers will still see a net reduction in their federal income tax under the proposed tax reforms. The plan calls for doubling the standard deduction, currently $6,300 for single filers and $12,600 for most married couples.
The reform would lower the top tax bracket from 39.5 percent to 35 percent for individuals and families, and cut the number of brackets from seven to three. The other tax brackets would be at 25 percent and 12 percent.
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