A bill that recently passed the House could help taxpayers avoid “double” taxation.
It’s tax season, and once again, thousands of taxpayers in New Jersey’s 3rd congressional district won’t be able to deduct as much as they used to.
They didn’t do anything wrong. But the 2017 tax law changes, President Donald Trump’s signature legislation, have made tax burdens in high tax states like New Jersey even more burdensome.
Recently, Congressman Andy Kim (D-NJ) asked constituents across Burlington and Ocean Counties which issues were most important to them. Over half of the 1,100 respondents, according to Kim’s office, said that state and local taxes were top of mind.
In 2016, Kim’s office says nearly 2 million New Jersey taxpayers deducted their property and state income taxes from their federal tax returns, at an average deduction $18,000 per filer.
That all changed the following year with President Donald Trump’s tax bill, which capped how much state and local taxes “SALT” taxpayers could deduct at $10,000.
Democrats in Congress are trying to fix that, and the House passed a bill in December that would remove the cap on deducting state and local taxes. Kim sponsored and voted to support the bill, which now heads to the Senate.
“The 2017 tax law didn’t just take away the SALT deduction, it took money out of the pockets of New Jersey’s working families. Today’s vote is an important step to fix that, and I’m going to keep fighting until the job is done,” Kim said in a statement after the House vote.
But just how much does the SALT change hurt taxpayers in New Jersey’s 3rd? The individual effects can be difficult to discern, so Courier built a model to find out. First we looked at Census data on mean income in the district to determine an average tax rate of 20% to 25% for this deduction. Then using data from the Tax Policy Center on the average SALT deduction in 2016, we calculated that, on average, taxpayers from Kim’s district who claim a larger SALT deduction could save between $594.96 and $743.70 per year on their tax bill.
That’s enough money to buy season passes to Six Flags Great adventure for the whole family.
“We have a chance now to work together to fix this problem and to make sure that by this time next year, we spare New Jersey taxpayers the shock of a surprise bill and replace it with the peace of mind and economic security they deserve,” Kim said.