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Nearly a quarter of a million middle class Nebraska homeowners just got some help from Congress which shaved some money off their federal income tax bills.
Currently, the opportunity to deduct local property taxes from your federal income tax is only available to those who itemize their deductions. In 2005, over $700 million in property taxes were deducted by Nebraskans filing itemized federal tax returns. Taxpayers who do not itemize may claim the standard deduction, but the deduction does not adequately account for property taxes.
New Deduction for Middle Class Homeowners
What we did last week in Congress makes the tax code fairer for middle class Nebraskans who own their homes but do not itemize. These are hard working Nebraska homeowners, many of them elderly, who are the backbone of our nation and it’s about time they got the same property tax break that other homeowners get.
Several of my colleagues and I joined forces to make sure that when homeowners who do not itemize file their federal income tax next year they will have a standard property tax deduction of up to $500 for individuals and $1000 for joint filers.
That's good news for the 247,000 middle income Nebraska homeowners who don’t itemize because they'll have a lower federal tax bill next year as a result of this legislation.
For example, a family earning between $65,100 and $131,450 who's eligible for a $1000 deduction would save $250 on their federal taxes.
Taxpayers Deserve a Break
Middle class taxpayers are working harder than ever to meet their financial commitments and rising property taxes have not made that any easier. Nebraska's property tax burden ranks high among the 50 states, and property taxes nationwide have increased by 50% since the year 2000. It has been extremely unfair to taxpayers who have been unable to deduct those taxes because the standard deduction has not kept up with the rapid rise in property taxes.
A lot of attention and energy has been focused recently on subprime lending abuses, the foreclosure crisis, turmoil in the financial markets, and falling home prices; and I’m pleased that the housing bill Congress approved last week takes important steps to address these issues.
But I wanted to focus on the modest tax break the bill provides for regular middle-class homeowners, the vast majority of which make their house payments on time and do their best to cope with the market woes, rising energy prices, and the like.
What's in the Housing Bill for You?
I’m sure many of you heard the news about the housing bill and thought "what's in it for me?" Well, amid talk of “bailouts” and the usual bickering in Washington, we were able to come together and provide tax relief for the middle class.
I'm proud to be able to say to the nearly 250,000 middle class Nebraskans who are eligible for this tax break that someone in Washington is working for you. Next year when you pick up your form 1040 to file your 2008 tax return, I hope you fill in the standard deduction for your property taxes knowing that the tax relief it provides will make things just a little bit easier during tough economic times.
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