Financial Rescue Bill Includes One-Year Extension of Holt's Property Tax Relief Initiative

Press Release

The Emergency Economic Stabilization Act, which the U.S. House of Representatives passed today with the support of Rep. Rush Holt, includes a one-year extension of Holt's property tax relief initiative. The Holt property tax deduction, which President Bush signed into law in August, currently applies to 2008 and will benefit homeowners who do not itemize on their Federal tax returns. Under the law, single-filing property taxpayers will be able to take an additional standard deduction of $500 and joint filers will be able to deduct $1,000 for state and local property taxes paid or accrued.

"During this financial crisis, our first priority must be to help families first," Holt said. "Millions of Americans will now be able to benefit - for two years - from this new property tax relief initiative."

In 2005, there were 72.3 million owner-occupied households in the United States, but only 40.5 million taxpayers claimed an itemized deduction for real estate property taxes. The more than 30 million homeowners who don't currently benefit from property tax deductions include elderly homeowners who no longer itemize in order to receive a mortgage interest deduction but are still subject to high property taxes.

The standard federal tax deduction is adjusted each year for inflation, but that adjustment does not take into account the rising property tax values and increases. Based on Census data, the total amount of state and local property taxes paid in the United States increased by 50 percent from 2000 to 2006. Over the same period of time, inflation increased by only 17 percent. Over that time, median household income actually dropped by 2 percent.

Source