Losing sleep over clean energy tax credit cuts

Daily Point

Garbarino's dream of clean energy credits becomes a nightmare

While all but two Republican holdouts fell in line with President Donald Trump’s "big, beautiful bill" Wednesday, Long Island Rep. Andrew Garbarino, of Bayport, apparently fell asleep.

According to Politico, Speaker Mike Johnson told reporters: "He fell asleep in the back, no kidding."

Thursday morning, a Garbarino spokeswoman texted a statement to The Point that read, in part, "I was moments away from the House floor, to vote ‘yes,’ when the vote was closed. While I am frustrated that the vote was closed before I was able to cast my vote, I am proud of the work we accomplished to deliver huge results for Long Island."

Perhaps Johnson was using a metaphor to poke a little fun at Garbarino, whom he called "my great friend." Otherwise, if Garbarino was napping during the vote, why didn’t his own party members wake him up? That’s the question House colleagues were asking.

Thursday afternoon, Johnson praised Garbarino in a post to X as " ... a primary reason we were able to secure the deals which allowed us to pass our nation-shaping legislation this morning. Andrew is highly regarded by me and all our Members as one of the most trusted, reliable, and talented colleagues in the House ..."

Garbarino’s statement did not mention that over the weekend he was part of the congressional delegation representing the United States at the Vatican for the installation of Pope Leo XIV, and perhaps had some jet lag. Those were also the days when GOP budget hawks worked to kill the green tax credits the Suffolk member was trying to protect.

Conservatives have argued that the tax credits are no longer needed since they mostly help solar and wind companies already up and running. Democrats have argued that killing the tax rebates would throttle future investment in clean energy and cut jobs.

Garbarino led a group of fellow Republican House members, including Rep. Nick LaLota, of Amityville, in advocating for saving the clean energy tax rebates. In the 2nd Congressional District, which Garbarino represents, Suffolk County and Brookhaven Town receive significant benefits from the rebates. That’s an especially important topic for Brookhaven, which is in the process of phasing out the town landfill and is in need of tens of millions in projected lost revenue from landfill fees.

The House bill now headed to the Senate, however, will make it difficult if not impossible for clean energy companies to consider new projects. Some environmentalists say the process to obtain the credits will become too onerous for companies.

"It’s a de facto repeal," Jack Pratt, associate vice president of Environmental Defense Fund Action, told The Point. "The provisions make it unusable."

Pratt said: " ... all of the incentives are either repealed at the end of this year (including the electric vehicle tax credits and residential/energy efficiency tax credits) or phased out."

Pratt said projects "in the pipeline right now would not be able to claim those incentives."

The impact to Long Island, Pratt said, "would be substantial."

Most likely to cause Long Islanders sleepless nights, Pratt wrote, is that "Electricity costs will go up." Pratt pointed to a Rhodium Group report stating the nationwide demand for electricity could increase by 15% by 2029 while repealing clean energy tax rebates will likely result in a 10% increase in electricity prices for businesses next year and a 7% increase for homes.

The report said the IRA resulted in $600 billion being invested nationwide in green energy, with $5.6 billion invested in New York State and 3,079 jobs created. The 2024 New York Clean Energy Industry Report states that 7,700 clean energy jobs were added between 2022-23.

We don’t know the details of the House bill yet, and four Republican senators signed a letter last month urging Congress to keep the clean energy tax rebates. But that may not be enough to sway the full Senate when it grapples with the "big, beautiful bill" during its reconciliation process in the next few weeks.

— Mark Nolan mark.nolan@newsday.com

Pencil Point

A 'kill' bill

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Final Point

Does SALT add some pepper to your tax return?

It’s unlikely the Senate will do much to change the deduction for state and local taxes that Donald Trump capped at $10,000 in his first term. So the provisions in the House bill passed in the wee hours of Thursday morning are likely what will rule when New Yorkers file their 2025 returns next year.

That House bill raises the current cap on SALT deductions from $10,000, which applies regardless of income, to $40,000 for households earning no more than $500,000, at which point it gets phased out. For those with incomes between $500,000 and $600,000, the SALT cap decreases linearly ending at a $10,000 cap at a $600,000 income.

Above $600,000, the SALT cap is $10,000. However, tucked in another section of the bill, the $10K cap is cut further for those in the highest bracket, 37%. Called a "haircut," that provision reduces the $10,000 deduction by 13.5% or $1,350.

It’s difficult to be precise about how many dollars will remain in the pockets of high-taxed New Yorkers due to the new higher cap but a good number will benefit, especially those in the suburbs who pay high property and school taxes. For instance, a household earning $200,000 that pays about $20,000 in state income taxes and could well have a $20,000 property tax bill can take advantage of the full deduction. Income and taxes above that will quickly hit the $40,000 cap.

Historical data does provide some insights on who benefits and who comes up short because the GOP refused to back an unlimited deduction. Across Long Island, 1.4 million returns were filed in 2022 by households earning under $500,000, according to the state Department of Taxation and Finance. That’s 97.4% of all taxpaying households with 675,322 returns filed by Nassau residents and 758,149 by Suffolk residents.

However, not all households that make under $500,000 filed returns to claim the $10,000 deduction in 2022, perhaps because at the lower end, the standard deduction gave them a better return. Even though the standard deduction was increased, more itemized returns are likely for the 2025 tax year because of the higher cap.

In 2022, the most current IRS data available, only 17.8% of all Long Island taxpayers claimed SALT deductions according to The Point’s analysis. In CD1, 16.3% of taxpaying households claimed SALT deductions. CD2 had the least, with 15.3% using the deduction. Those rates were 18.7% for CD4 and 20.8% CD3, which has probably the biggest concentration of high-income earners.

But compared with the rest of New York State, Long Islanders itemized deductions more than any other region. More than 31% of all state itemized deductions from Nassau County in 2022 came from 125,478 households with gross income between $100,000 and $199,000, and 33% of Suffolk’s total state itemized deductions came from 132,058 households in a similar income range. The average SALT deduction claimed in 2022 across Long Island was $9,436.38.

— Karthika Namboothiri karthika.namboothiri@newsday.com, Rita Ciolli rita.ciolli@newsday.com

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