July 26, 2006

Senators eye standard property tax deduction

WASHINGTON (Reuters) - Homeowners who do not itemize their
federal income tax returns would get an additional standard
deduction of up to $1,000 for state and local property taxes
under a U.S. Senate bill introduced on Wednesday.

The measure, introduced by Democratic Sens. Max Baucus of
Montana and Robert Menendez of New Jersey, is aimed aiding
seniors and other homeowners with paid-off mortgages by
defraying the cost of state and local taxes paid to support
public education.

Many U.S. taxpayers are not able to itemize their federal
returns because without the substantial income deductions from
mortgage interest payments, their other deductions fail to
exceed standard deduction amounts.

Homeowners who do not itemize miss out on federal tax
savings from deductions for state and local tax payments.

The deduction provided under the bill would be $500 for
single filers and $1,000 on a jointly filed return.
Non-itemizers would be able to claim the deduction on top of
their standard deduction.

"This deduction will help out all honest taxpayers who do
their part for public education in their communities and for
other local concerns," said Baucus, the ranking Democrat on the
tax-writing Senate Finance Committee.

However, he said the Senate was not likely to act on the
bill until next year.

Congress is working to finish up legislative business
before an August recess. When it returns in September,
lawmakers will have about one month to finish up appropriations
bills for the new fiscal year starting October 1 before
breaking again to campaign for November elections.