Bayh, Hill Propose Property Tax Deduction Bill

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(UNDATED) - The state has already approved a property-tax relief package. Now Congress may get into the act.

Next year only, you'd be able to deduct 500 dollars worth of property tax payments on your income tax next year, under a proposal in both the House and Senate. Couples could deduct a thousand dollars. That would reduce the amount you owe by anywhere from 50 to 350 dollars.

Property taxes are already deductible, but only if you itemize. Indiana Senator Evan Bayh says that shuts out two-thirds of taxpayers nationwide, or about 942,000 Hoosiers.

Bayh, Senator Max Baucus (D-Montana) and Indiana Rep. Baron Hill (D-9th) proposed the tax break. It's been added to bills seeking to stop the bleeding from the mortgage crisis.

The bill restructures $300-billion dollars worth of mortgages to try to stave off foreclosures. Bayh says both parties and both houses appear to agree on the tax proposal. But the House and President Bush object to a senate provision to give tax breaks to banks and builders.

White House Spokeswoman Dana Perino has labeled it a "bailout for lenders and speculators."

The Senate is expected to pass its version of the bill this week.

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