TAX NEWS - June 2010

New York Tax: Gillibrand looking to help middle class through tax cuts

Sen. Kirsten Gillibrand is trying to push legislation through this week that could save people in Franklin and Essex counties $5.8 million in property taxes and $2 million in income taxes and help 4,168 college students.

Gillibrand is proposing the extension of a group of tax cuts that she says have been vital in helping middle-class Americans through the Great Recession.

"We all know that New Yorkers pay some of the highest taxes in the county, and after the last two years of financial devastation, middle-class families truly deserve relief," Gillibrand said in a Tuesday conference call.

The three major tax cuts that she said she believes will help New Yorkers the most are a property tax deduction, state and local sales tax deductions and a qualified tuition deduction.

The property tax deduction is specifically for people who do not itemize their federal tax deductions - it's always been possible to do if a taxpayer itemized.

"So this would now expand it to more people," Gillibrand said. "And it helps particularly middle-class families, because those are the ones that tend not to itemize."

A 2008 bill allowed this but capped the deduction, and it expired at the end of 2009. Gillibrand's bill would lift the cap and make the deduction permanent.

With the state and local sales tax deduction, Gillibrand would offer taxpayers the ability to deduct state and local sales tax rather than state income taxes. She said many localities in New York are making up for declining revenues by raising sales taxes, so that deduction may be more economically beneficial to middle-class residents.

Taxpayers could save their receipts and add them up at tax time or using a calculator that would estimate the deduction on the IRS website.

The qualified tuition deduction would allow all taxpayers to deduct up to $4,000 of higher education expenses - like tuition, books and fees - at any accredited post-secondary institution.

"This is to help make higher education affordable for New York families," Gillibrand said.

Many people would also be eligible for the American Opportunity Credit passed last year as part of the American Recovery and Reinvestment Act, so Gillibrand said taxpayers should look at both credits and see which would be more economically beneficial.

The legislation has a very good chance at passing, Gillibrand said, and she hopes to see a vote this week.