The most significant tax reform in over 30 years has been passed by the Senate. The 479-page tax bill proposed by the Republican Party passed in a 51-49 vote. The bill is not yet law as the House and Senate must be in agreement. Now, House and Senate negotiators will attempt to settle on a compromised version. The nonpartisan Congressional Budget Of ce (CBO) estimates the bill will add $1.5 trillion to the deficit. The bill’s policy expires at the start of 2026 when the tax code will revert to current law.
If the bill is enacted into law, citizens in the affluent New York area could become major losers. According to one economic analysis, home prices could plummet at least 10%. The bill could increase regional tax burden and force cuts in federal programs that help minority populations such as immigrants.
Most relevant for well-off New Yorkers is that the bill would eliminate state and local tax deductions and cap the deduction for property taxes at $10,000. Wealthy families in affluent suburban counties such as Westchester County, Nassau County, as well as the city will see a tax increase. The state and local tax income and sales deduction will be cut. Westchester has the fifth highest average deduction for state and local deductions (SALT) in the country on its citizens tax returns. Losing deductions could lead to paying higher taxes.
An economic overview of Briarcliff Manor includes the following: the sales tax rate is 7.38 percent and the income tax is 6.45 percent. The average household income of Briarcliff Manor is $254,518, placing our town in a high tax bracket, causing the rate, and thus the amount of taxes, to be higher.
Another important aspect of the bill is the repeal of the estate tax. The estate tax is a tax on cash, real estate, stocks and other assets that are passed along generations. Currently, any individual’s estate that is over $5.49 million in value or a married couple’s estate that is priced above $10.98 million is taxed up to 40 percent upon the owner’s death.
Clearly, the tax bill will greatly affect local families. It remains to be seen what kind of effect this tax bill has on the country.