House members relaunch bipartisan SALT caucus. Members on both sides of the aisle from high-tax states like New York, New Jersey, California, and Illinois are again joining forces to develop specific policies to help constituents affected by the federal $10,000 cap on state and local tax deductions. Specifically, they want to prevent an extension of the cap.
Stay tuned for a May 2023 IRS report on direct filing of tax returns. In a statement, the IRS shared that it will deliver a report on a new direct filing system to Congress in May. It is working with the nonprofit organization New America on the system, which could be an app or web platform that allows individuals to file their returns directly with the IRS.
West Virginia Senate approves a $600 million tax cut. The legislation includes a 15 percent decrease in the state’s personal income tax, a rebate for taxes paid on vehicles, and a 50 percent rebate for taxes paid on equipment and inventory by small businesses. The bill also eliminates the “marriage penalty” for joint tax filers. The bill will have to be reconciled with the House-approved plan to cut the income tax by 50 percent, a more aggressive proposal favored by Gov. Jim Justice.
Kentucky’s Republican-led Senate sent an income tax cut bill to Gov Beshear. The bill would lower the individual income tax rate from 4.5 percent to 4 percent starting Jan. 1, 2024. Last year, Kentucky’s tax overhaul reduced the rate from 5 percent. Democratic Gov. Andy Beshear, who is seeking reelection, says he’s “keeping an open mind” about the measure.
And there may be an appetite for a child tax credit in Nebraska. State Sen. Danielle Conrad introduced a bill that would give $1,000 per child to most parents in Nebraska. Single parents earning up to $75,000 or married couples earning up to $110,000 annually would qualify for the full credit. The bill would affect 470,000 households, or 81 percent of Nebraska’s children. The credit would cost $415 million over its first four years.
How much did New York’s tax abatements affect the state’s schools? A report from advocacy organization Good Jobs First says that schools lost $1.8 billion in tax revenue in fiscal year 2021 because of a property tax abatement program available to state businesses. A new government accounting rule requires most school districts, cities and counties to disclose how much revenue they lose to such corporate tax breaks. The report has prompted new legislative efforts to prevent abatement of the schools’ share of property taxes.
Portland, Oregon, taxpayers getting a memo on unpaid taxes. The city’s Bureau of Revenue and Financial Services is sending about 20,000 letters to high-income households to warn them they did not yet pay the homeless services tax or preschool-for-all tax. Individuals who earned over $125,000 annually or couples who earned over $200,000 combined must pay taxes ranging from 1 percent to 3 percent on income over those thresholds. Officials say they alerted employers, accountants, and tax prep firms about the taxes, but those alerts appear to have been insufficient.
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