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NYS Senate Approves Bill Decoupling State from Federal Tax Code

Chris Gaetano
Published Date:
Jan 23, 2018

The New York State Senate passed a bill that decouples state tax law from the federal changes that were approved as part of the Republican tax bill which passed in December.  The bill, S06974A, essentially says that any reference to the laws of the United States mentioned in the state tax law means the provisions contained in the Internal Revenue Code and any amendments to it made prior to Dec. 1, 2017. The bill also removes language referring to the federal government with regard to itemizing deductions. Currently, New Yorkers can itemize deductions on their personal income tax only if they also itemize on their federal returns. The bill would allow them to itemize their New York taxes even if they can't do so for their federal taxes.

The bill also replaces language saying individuals whose federal exemption amount is zero gets a $7,500 standard New York deduction: under the legislation, this would apply, instead, to those who are claimed as dependents by another New York state taxpayer.

The Empire Center, an Albany-based fiscally conservative think tank, said that the recently-released executive budget, curiously, did not have language decoupling state and federal tax law. It said that, without such a change, it would amount to a roughly $1.5 billion tax increase on New Yorkers, who would no longer be able to itemize. The blog post, written on Jan. 18, proposes the exact solution taken in the bill: simply draw a line at 2017, before the new federal tax law went into effect. 

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