Tax Reform and State and Local Taxation: Initial New York State ReactionsSullivan & Cromwell LLP - January 22, 2018
Pursuant to the federal tax reform enacted in December 2017, individuals are significantly limited in their ability to deduct state and local taxes. As a result, states with high state tax rates have an incentive to change the structure of their tax laws in order to promote greater deductibility on state and local taxes. Moreover, the new federal tax law raises a number of substantial conformity issues.
There have been two recent developments in New York State (“NY” or “State”). First, on January 17, 2018, the New York State Department of Taxation and Finance (the “Department”) released a Preliminary Report on the Federal Tax Cuts and Jobs Act (the “Preliminary Report”) (i) outlining options for State tax reform in response to the new federal law and (ii) addressing certain conformity issues. Second, on January 18, 2018, NY Governor Andrew M. Cuomo announced a proposal to close what the Governor labelled the “carried interest loophole.”