SALT Workaround Adds Confusion to New York’s Budget Process

The workaround New York created in 2021 for the $10,000 federal deduction limit for state and local taxes is adding a new layer of complexity to the state’s budgeting process as officials anticipate billions in future fiscal gaps.

While the new tax structure is expected to be revenue-neutral over time, it has obscured collection trends as the state’s bean counters contend with dwindling federal aid and a weakening economy. New York is projecting a $36.4 billion budget gap through fiscal 2026, prompting state Comptroller Thomas DiNapoli to push lawmakers for “prudent fiscal discipline.”

DiNapoli’s report earlier this month showed how ...