High-tax states plan workarounds to the federal SALT deduction

Personal Finance

Absent of any changes, the state estimates that New Yorkers would pay an additional $14 billion a year in taxes.

So earlier this month, New York Gov. Andrew Cuomo ordered the Department of Taxation and Finance to craft ways for the state to respond to the GOP tax bill. The department emerged with a slew of proposals to reshape New York’s taxation.

“All of them are designed to give back to New Yorkers what the federal government took away,” Mujica said.

The first proposal basically mirrors California’s plan. Residents would contribute their SALT taxes beyond the $10,000 cap to a state charity, and therefore make their entire bill eligible for deduction.

The other major proposal would shift income taxes to payroll taxes — or from employees who can no longer deduct taxes to employers who still can.

Employers, facing a higher tax bill, would most likely reduce wages. But the state would give employees a wage credit, which would be deductible.

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