Under plans proposed by House Democrats, the best earnings in New York could be subject to a combined municipal, state, and federal income tax rate of 61.2%.
Proposed plans include a 3% surcharge on taxpayers who earn more than $ 5 million annually. The plans also include raising the higher marginal rate of income tax to 39.6% from the current 37%. The plans maintain a 3.8% net investment income tax and extend it to some transition activities (individual businesses reporting their income data in the owner’s individual income accounts and treating personal income as taxable).
The result is a 46.4% higher federal marginal income tax rate, CNBC said. Where the marginal rate is referred to as the rate per dollar above the income level of the tax bracket.
For New York City, the highest marginal tax rate in the state and city is 14.8%. So New York City taxpayers earning more than $ 5 million annually would face a combined marginal rate of city, state, and federal taxes of 61.2 percent under the House plan.
This comes, while the parliament plan is still only a proposal and can be changed. However, New York City’s aggregate rates will be among the highest in almost 40 years.
Californians with the highest income would experience a compound marginal rate of 59.7%, while New Jersey residents would experience a compound marginal rate of 57.2%. Hawaii could face aggregate rates of 57.4%.
At the same time, there is no indication that the House plan includes removing or changing the current $ 10,000 limit in state and local tax cuts known as SALT.
Removing the SALT cap would greatly benefit high-income earners in higher-tax states, some of whom have seen tax increases under the 2017 tax plan because they can no longer deduct much of their state and local taxes.
And people familiar with the tax plans say House leaders may still try to change SALT limits in proposals. future.
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