New Jersey-2024-SR22-Introduced

A Senate Resolution urging the United States Congress to reinstate the unlimited state and local tax deduction.

Whereas, American taxpayers have had the option of offsetting the amount of federal taxes owed on their federal income tax returns through the use of the state and local tax (SALT) deduction for over 100 years; and

Whereas, Utilizing the SALT deduction, federal taxpayers who itemize deductions, as opposed to claiming the standard deduction, may deduct the amount of state and local real estate and personal property taxes paid, as well as either state and local income taxes paid or sales taxes paid; and

Whereas, In 2014, over 41 percent of New Jersey residents who filed federal income tax returns claimed the SALT deduction on their returns; and

Whereas, The SALT deduction also provides a benefit to residents of states such as New Jersey by decreasing the amount of federal taxes owed by those residents; and

Whereas, In December 2017, under the federal "Tax Cuts and Jobs Act," Pub.L. 115-97, the federal government capped the amount of the SALT deduction at $10,000 for most filers beginning in tax year 2018; and

Whereas, In the 2017 tax year, the average SALT deduction taken in New Jersey was $19,089; and

Whereas, In 2018, the State of New Jersey only received 79 cents back for every dollar paid by its residents in federal taxes, the least amount received back from the federal government by any state; and

Whereas, New Jersey is considered to be a "donor state" because New Jersey residents pay more in federal taxes than the State receives back in federal funding; and

Whereas, In light of the substantial financial benefit that the SALT deduction provides to New Jersey residents and the State, as well as the significant disparity in the amount that New Jersey residents pay in federal taxes as compared to what the State receives back in federal funding, Congress should act to reinstate the SALT deduction without limitation; now, therefore,

Be It Resolved by the Senate of the State of New Jersey:

1. The Senate of the State of New Jersey hereby urges the United States Congress to reinstate the state and local tax deduction without limitation.

2. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Secretary of the Senate to the Majority and Minority Leaders of the United States Senate, the Speaker and Minority Leader of the United States House of Representatives, and every member of Congress elected from this State.

STATEMENT

This resolution urges Congress to reinstate the unlimited state and local tax (SALT) deduction. For over 100 years, the SALT deduction has been available to American taxpayers. The SALT deduction allows federal taxpayers who itemize deductions on federal income tax returns the option to deduct payments for state and local taxes from federal income tax liability. This deduction is a significant financial benefit to both New Jersey residents who pay federal taxes and the State itself. In 2017, the federal government limited the amount of the SALT deduction to $10,000, whereas the average SALT deduction taken by New Jersey taxpayers was almost double that amount.

New Jersey is considered to be a "donor state" because the amount of federal taxes paid by New Jersey's residents exceeds the amount that the State receives back in federal funding. In 2018, the State of New Jersey received the least amount of federal funding of any state. Congress should reinstate the SALT deduction without limitation in order to remedy some of this tax disparity.