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Trump Looking to Ax Tax Deduction That 4 in 10 CT Taxpayers Use

August 31, 2017 By Staff
Trump Looking to Ax Tax Deduction That 4 in 10 CT Taxpayers Use

The state and local tax deduction is incredibly valuable to Connecticut taxpayers, but some argue it has subsidized high taxes in liberal states for years.

President Trump and his team are considering axing the state and local tax deduction in any tax reform plan they push on Capitol Hill this year. This deduction disproportionately benefits taxpayers in high-tax states like Connecticut.

NTK Network, Bloomberg, and others reported in July that the Trump team is considering killing the deduction, which Presidents Ronald Reagan and George W. Bush also tried to kill in prior tax reform efforts, is worth around $1 trillion in tax revenue over 10 years.

According to a 2017 study from the Tax Foundation, though, Connecticut benefits from the state and local tax deduction more than other states. More than four in ten Connecticut taxpayers itemize the state and local tax deduction, among the highest proportion in the country:

  • Maryland: 45.2%
  • Connecticut: 41.2%
  • New Jersey: 41.1%
  • District of Columbia: 39.4%

According to the same study, the size of the state and local tax deduction, as a percentage of adjusted gross income (AGI), is also among the highest in the country:

  • New York: 9.1%
  • New Jersey: 8.7%
  • Connecticut: 8.3%
  • California: 7.9%

This means that, for the four in ten Connecticut taxpayers who take the state and local tax deduction, eliminating that deduction will result in an average of an eight-percent income hit.