Bayh Proposes More Property Tax Relief to Help Indiana Homeowners

Plan would bring permanent tax fairness to more than 900,000 middle-class Hoosiers, removes caps on deductions

Washington, DC - June 17, 2009 - (RealEstateRama) — Senator Evan Bayh today proposed legislation that would expand and make permanent federal property tax relief for more than 900,000 Hoosier homeowners who do not itemize their federal tax deductions. The enhanced deduction would offer new tax relief for up to 30 million homeowners across the country.

Senator Bayh’s tax relief legislation, introduced jointly with Senator Mel Martinez (R-FL), would immediately and permanently lift caps on the state and local property taxes that non-itemizing homeowners may deduct from their federal taxes, so homeowners can deduct the full value of their property tax bill.

Prior to 2008, only taxpayers who itemized their deductions could claim a deduction for state and local property taxes. Last year, Bayh wrote and passed a bill that allowed non-itemizers to take a deduction for property taxes for the first time. However, the final version of the legislation limited the deduction to $500 for individuals ($1,000 for families) and is scheduled to expire after 2009. The legislation introduced today lifts the caps and makes the property tax relief permanent.

“With property taxes on the rise and the dream of homeownership threatened in many Hoosier communities, middle-class families should not be penalized simply because they do not itemize their tax returns,” said Senator Bayh.  “Washington needs to work for homeowners, and this critical legislation will provide permanent, sorely needed tax relief to hundreds of thousands of Hoosiers and millions more families nationwide.”

The current tax code favors filers who itemize, because it allows taxpayers to take advantage of property tax deductions that are unavailable to non-itemizing taxpayers.  The benefit of the new Bayh legislation for Hoosiers will vary according to the value of their home and their tax rate. For example, under Bayh’s proposal:

• A non-itemizing family with $75,000 of taxable income and a $3,000 property tax bill would receive a $750 tax cut this year—$500 more than under current law;
• A non-itemizing single taxpayer with $50,000 of taxable income and a $2,000 property tax bill would receive a $300 tax cut—$225 more than under current law;
• A non-itemizing senior citizen on a fixed income of $35,000 per year and a $1,500 property tax bill would see a $225 tax cut—$150 more than under current law.

As many as 30 million homeowners—including more than 900,000 Hoosier homeowners—who do not currently itemize their tax deductions could be eligible for Bayh’s proposal. Taxpayers who do not itemize and have property tax bills that exceed the current caps will be eligible for the enhanced deduction starting this year.

Original cosponsors of Bayh’s legislation include Senators Martinez, Chuck Schumer (D-NY), Kirsten Gillibrand (D-NY), Debbie Stabenow (D-MI), and Frank Lautenberg (D-NJ).

Tagged as: Evan Bayh, homeowners, property tax, Senator

 

 

 

 

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