By David S. Joachim | December 10, 2018
The new federal tax law’s $10,000 limit on deductions for the payment of state and local taxes means that a Pelham wage earner who pays the median property tax of more than $27,000 will lose roughly $6,000 in tax benefits.
It’s impossible to know just how many Pelhamites will feel the effects of the deduction cap, because every tax situation is different. But several factors will make it a non-issue for many.
For starters, roughly 20 percent of town residents aren’t affected directly because they rent their homes.
Then there are the high earners who often pay the alternative minimum tax, known as the AMT, which limits deductions. These taxpayers already couldn’t deduct their property taxes from their taxable income.
Many households in the Town of Pelham, where 37 percent made more than $200,000 in 2016, probably pay the AMT. Many will also benefit from a lower overall tax rate under the new code, which could mitigate any loss of deductions.
Among the most vulnerable to the tax change are wage earners who don’t pay the AMT and newcomers who carry large mortgages — a common occurrence in a town where the schools are in high demand and the median home value now exceeds $800,000.
Retiree homeowners on a fixed income could feel the sting, too. Roughly 14 percent of the town’s 12,560 residents were 65 or older in 2016.
Copyright David S. Joachim, 2018
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David S. Joachim is a Pelham Manor homeowner and an investigations editor at Bloomberg News, where he primarily covers the special counsel investigation of Russian interference in the 2016 presidential election. Before that, he was an editor and reporter in New York and Washington for The New York Times.
More information about him is available at davidjoachim.com. He can be reached at email@example.com.
This report was produced independently, for a graduate-school project at Syracuse University. It has no affiliation with Bloomberg News or Bloomberg LP.