NJ Senate tells Congress they want federal cap on property taxes raised
When Congress passed the Tax Cuts and Jobs Act in 2017, a cap was put on the amount property owners could deduct for state and local taxes (SALT) on their federal tax returns. A $10,000 cap was put on SALT deductions. That change became a sore point in states with high property taxes, including New Jersey, New York, Connecticut and some of the states on the West Coast.
To call for relief for New Jersey taxpayers who face some of the highest property tax bills in the country, the state Senate introduced Senate Resolution 111 that urged the United States Congress to reinstate the unlimited SALT tax deductions.
The deduction, a pillar of U.S. tax policy since the Civil War, allows taxpayers to write off taxes paid at the state and local level from their federal income tax bill with the notion they won’t be subject to being taxed twice on the same dollar. Before the $10,000 cap was put in place, the average New Jersey taxpayer was deducting more than $19,000 from their income tax for SALT taxes.
On January 28, New Jersey’s U.S. Senators Cory Booker and Bob Menendez, introduced the Securing Access to Lower Taxes by Ensuring Deductibility Act that would repeal the $10,000 federal cap on state and local tax deductions. In New Jersey, with high property, income, and county taxes, the reinstatement of the full SALT adjustment has continued to be a concern many lawmakers.
Even if the NJ Senate resolution passes, it is a resolution and it has no teeth. It does sends a message to Congress and the Biden administration that the state’s elected officials believe the cap has disproportionately impacted New Jersey property owners and they think it amounted to a tax hike on thousands of middle-class families and small business owners who own their buildings.