GOP chairman says tax bill to include property tax deduction

House Ways and Means Committee Chairman Kevin Brady (R-Texas) said on Saturday that he is planning to include a deduction for local property taxes in forthcoming legislation.

“At the urging of lawmakers, we are restoring an itemized property tax deduction to help taxpayers with local tax burdens,” Brady said in a statement.

The statement comes just before Wednesday’s expected release of a tax bill. In recent weeks, Brady has been meeting with GOP lawmakers from high-tax states to figure out how the bill would treat state and local taxes.

Under current law, taxpayers who itemize can deduct their property taxes as well as either their state and local income taxes or their sales taxes.

The tax framework Republicans released last month called for repealing the full state and local tax deduction in an effort to help raise revenue to pay for lowering tax rates. But Republican House members from states such as New York and New Jersey have said that full elimination of the deduction would hurt their constituents. Most GOP House members from the Empire and Garden states voted against the budget resolution on Thursday to send a message about a need for an accommodation.

Rep. Chris Collins (R-N.Y.), one of two New York Republicans that voted for the budget, told Bloomberg that he thought Brady’s plan to retain the property tax deduction would address lawmakers’ concerns.

But a coalition fighting repeal of the state and local tax deduction called Americans Against Double Taxation said Saturday that it opposes partial elimination.

“Chairman Brady’s partial elimination plan for the state and local tax (SALT) deduction would insert the heavy hand of Washington into state and local finance decisions, dictate winners and losers among states, and unfairly penalize taxpayers in states that rely significantly on income taxes,” said the coalition, which includes groups representing state and local governments and labor unions.

The National Association of Home Builders said Saturday that it planned to oppose the tax bill because Brady and Speaker Paul Ryan (R-Wis.) said that the legislation would not replace the property tax and mortgage-interest deductions with a credit that could be more widely taken.

Brady said that the credit idea is still on the table.

“The home builders have been great partners in developing a new home credit that helps more Americans with both their mortgage and property taxes, by expanding this tax relief to homeowners who don’t itemize,” he said. “I hope members of Congress will examine it closely to determine if they want it included before tax reform heads to the president’s desk.”

— This report was updated on Oct. 29 at 10:15 a.m.