Gov. Andrew Cuomo on May 5 signed a bill allowing workers to fully deduct their union dues from their state taxes.
The state budget created a union-dues deduction for New York taxpayers who itemize deductions at the state level equal to the amount currently disallowed at the federal level “due to the 2 percent floor,” Cuomo’s office said in a news release.
The state expects the deduction to save 500,000 people $35 million annually or about $70 per taxpayer per year.
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“By allowing full deduction of union dues, we are providing more than just a financial benefit, but also a strong demonstration of our unyielding commitment to defending union jobs as a pathway to the middle class,” Cuomo contended in the release.
The deduction
New Yorkers paying state and local taxes — who make charitable contributions and pay mortgage interest — are “likely to claim” itemized deductions on their federal tax returns. Many who itemize for federal purposes, may also itemize on their New York tax returns, Cuomo’s office contends.
An additional, but “less frequently used” deduction, applies for a group of miscellaneous expenses, such as union dues, professional society dues, the cost of work clothes, tax preparation, and out-of-pocket job expenses.
For this deduction, “a floor applies” in which only amounts in excess of 2 percent of taxpayers’ adjusted gross income are deductible.
The floor, therefore, likely prevents deductibility of a significant portion of union dues at the federal level, and in turn, fails to lower the “top line” starting point for the taxpayer’s New York return, or the individual’s federal taxable income.
The current state budget addresses this by creating a full union-dues deduction for New York taxpayers.
The new deduction applies both to New Yorkers who currently receive a deduction for only a portion of their union dues, or those in excess of 2 percent of their income.
It also applies to those who currently receive no deduction because their total miscellaneous deductions fall below the 2 percent established federal floor.
Union reaction
Gov. Cuomo is “taking the lead and recognizing the value” of union membership and the “importance” of providing the labor movement with “another helpful tool” for organizing working men and women, said Mario Cilento, president of the New York State AFL-CIO.
“This new benefit will put an estimated $35 million back into the pockets of our members in private sector, public sector, and building-trades unions throughout the state,” said Cilento. The New York State AFL-CIO has 2.5 million members.
George Gresham, president of 1199SEIU United Healthcare Workers East, called it a “common-sense measure that will align state-tax policy with federal policy and allow hard-working New Yorkers to keep a little more in their pockets at a time of rising prices.”
