January 23, 2025
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2025-26 Executive Budget Proposals: Tax Summary
January 23, 2025
On Tuesday, Governor Kathy Hochul released her SFY 2026 Executive Budget, totaling $252 billion, an increase in spending by 3.6% from the current year budget. The proposed spending proposal for the 2025-26 fiscal year enacts the Governor’s Affordability Agenda which she outlined during her State of the State Address last week. The Executive Budget proposes a number of critical tax amendments including:
· Extend Higher Income Tax Surcharge-extend until 2032 a 10.9% tax on the highest earners in our State (those earning $25 million or more), first enacted in 2020 and set to expire this year.
· One Time Inflation Refund- $3 billion rebate check ranging from $300-$500 for those making up to $300,000
· Middle Class Tax Cuts- a middle-class tax cut for joint filers making $323,000 or less,
· Enhance Child Care– child care tax credit capped at $1000 and free breakfast and lunch for public schoolchildren.
We have embedded (below and attached) a complete update on the tax amendments included in the Governor’s State Budget proposal and the estimated fiscal impacts.
The Governor has also said that there will need to be negotiations between herself, the Legislature and the MTA on a plan due April 1st to address the estimated $33 billion hole in the MTA’s capital plan.
Upon review, please let us know if you have any questions or if you would like additional details on any of the proposals. Thank you.
| Location in BudgetRevenue Art 7 | Proposal | Description of Executive Proposal | Executive Proposal Savings/Costs |
| Part A | Inflation Refund | Specifically, taxpayers who filed 2023 resident tax returns as married filing jointly or qualifying surviving spouse, and whose 2023 New York adjusted gross income was $300,000 or less, would receive a $500 credit in 2025. Taxpayers who filed 2023 resident tax returns as single, married filing separately, or head of household, and whose 2023 New York adjusted gross income was $150,000 or less, would receive a $300 credit in 2025. | Decrease All Funds revenue by $3.08 billion in FY 2026. |
| Part B | Middle-class tax cut and extend the temporary PIT high income surcharge for five years. | The bill would reduce the tax rates paid by married couples with incomes up to $323,200 who file jointly, for heads of households with incomes up to $269,300, and for single taxpayers and married taxpayers who file separately with incomes up to $215,400. The tax rates would be reduced in two phases: an initial rate cut applicable for tax year 2025 and a second rate cut beginning in tax year 2026.Chapter 59 of the Laws of 2022 phased out the PIT temporary high-income surcharge for tax years beginning after 2027. This bill would extend the surcharge through tax year 2032. | All funds revenue will bereduced by $458 million in FY 2026, $1.115 billion in FY 2027, $35 million in FY 2028, and increased by $2.56 billion in FY 2029 and $3.972 billion in FY 2030. |
| Part C | Enhance the Empire State Child Credit by expanding credit eligibility and increasing the credit amounts allowed for tax years 2025, 2026, and 2027. | Increase the Empire State Child Credits allowed for tax years 2025, 2026, and 2027. Specifically, a taxpayer would be allowed a refundable credit of $1,000 for each qualifying child under the age of four in tax years 2025, 2026 and 2027. Additionally, a taxpayer would be allowed a refundable credit of $330 for each qualifying child who is four years of age and not yet age seventeen in 2025, and $500 for each such qualifying child in 2026 and 2027. This bill would also expand eligibility to additional taxpayers in tax years 2025, 2026, and 2027. | Decrease All Funds revenue by $471 million in FY 2026 and $825 million in FY 2027 and FY 2028. |
| Part D | Increase the State Low-Income Housing Tax Credit (SLIHC) statewide allocation limit for each year from 2025 through 2029, doubling the amount of the year-over-year increases as compared with the prior multi-year SLIHC allocation law. It further clarifies that refunded bonds can be paired with SLIHC at the same 9% rate as certain federal low-income housing tax credits. | Laws of 2021 and 2022 increased the SLIHC statewide allocation limit by $15 million for each year from 2022 to 2025. This bill doubles those increases for each year from 2025 through 2029, raising the allocation increase to $30 million per year through 2029. This bill further clarifies that refunded bonds can be paired with SLIHC at the same 9% rate as certain federal low-income housing tax credits. | Reduce Financial Plan revenues by $15 million in FY 2027, $45 million in FY 2028, $75 million in FY 2029, and $105 million in FY 2030. |
| PART E | Allow taxpayers to transfer state historic tax credits to other taxpayers when approved by the Office of Parks, Recreation, and Historic Preservation (“NYS Parks”) and remove geographic limitations for the location of affordable housing projects supported by the state historic tax credit. | Would amend the sections of the Tax Law where these requirements appear to allow the recipient of the state historic tax credit to transfer the credit, in whole or in part, to another person or entity so long as such transfer is approved by the NYS Parks Commissioner, regardless of how the federal credit is allocated. This bill would also exempt from the law’s census tract limitations any affordable housing project subject to at least a thirty-year regulatory agreement, in addition to the existing exemption for projects located within land under NYS Parks’ jurisdiction. | No impact |
| PART F | Waiting Period Restriction and Limit Deductions on Institutional Real Estate Investors | This bill would prohibit certain institutional investors from seeking to buy a single- or two-family home unless it has been on the market for at least 75 days and would prohibit institutional investors from claiming interest and depreciation deductions with regard to one- and two-family homes. | Increase annual business tax revenue by $6 million in FY 2027, 2028, and 2029 |
| PART G | Create a new statewide economic development program, the Companies Attracting Talent to Advance Leading Innovations and Scale Technologies in New York Program, to be known as the “CATALIST NY Program | Small businesses participating in CATALIST NY would gain a competitive advantage in job creation by offering reduced personal income tax rates to their new hires, supporting their growth during crucial expansion phases | No impact |
| PART H | Extend and Amend the Excelsior Jobs Program | Extend the existing excelsior jobs program for ten years, from 2029 to 2039. Additionally, this bill would provide for enhancements to the program to (1) provide for enhanced excelsior benefits for semiconductor supply chain businesses; (2) create two new programs known as the semiconductor research and development project program and the semiconductor manufacturing workforce training incentive program; (3) extends the existing excelsior jobs program; and (4) sunsets the employee training incentive program | No impact |
| PART I | Extend and Amend the Film Tax Credit | For initial applications submitted after January 1, 2025, the existing payout tier structure will be eliminated. The bill establishes a new “production plus” initiative designed to attract recurring business and multiple productions to New York State. Further, the bill removes some restrictions on the above-the-line cost caps in the film production program and modifies the criteria for qualified independent film production companies. It introduces a formal definition for loan out companies and mandates a 6.85% withholding requirement on all payments made to these entities. | Decrease business tax revenue by $111 million in FY 2027, $115 million in FY 2028, and $115 million in FY 2029 |
| PART J | Make a Technical Change to the Newspaper and Broadcast Media Jobs Program | In defining “independently owned,” last year’s bill erroneously restricted the credit so that parent, subsidiary, and affiliate companies were all subject to one credit limitation. For example, if a parent corporation had 3 subsidiaries, the $300,000 credit cap under COM § 495(3) would apply to the parent and all subsidiaries as a whole; each subsidiary would not be eligible for its own $300,000 credit cap | No impact |
| PART K | Amend the Digital Gaming Media Production Credit Program | This bill would provide that any unused amount of the empire state digital gaming media production credit allocated for a given year would be carried over and added to the aggregate amount of credits allowed in subsequent years. | No impact |
| PART L | Extend the New York City Musical and Theatrical Production Credit for Two Years | This bill would extend the New York City musical and theatrical production credit for two years through tax year 2027 and increase the aggregate available under the program for the next two years by $100 million. | No impact in FY 2026 or 2027, but would decrease business tax revenue by $50 million in FY 2028 and $50 million in FY 2029 |
| PART M | Clarify Taxpayer Notification and Protest Rights | This bill would amend the Tax Law to clarify that the protest rights afforded to taxpayers are the same whether the taxpayer is informed via electronic communications or mailed communications. | No impact |
| PART N | Improve the Tax Warrant Process | This bill would amend the Tax Law to authorize the Tax Department to file all tax warrants and warrant-related records at the Department of State (DOS) to effect liens and judgments against the real, personal, and other property of tax debtors, while requiring the Tax Department to file a copy of any warrant and/or warrant-related records with the clerk of the county named in the warrant. | No impact |
| PART O | Simplify the STAR Income Definition | This bill would simplify the income and age eligibility rules for the STAR exemption and STAR credit programs. The bill would also make eligibility determinations, and the process to protest those determinations, consistent for all variations of the STAR program | Increase Financial Plan costs by $9 million starting in FY 2027. |
| PART P | Eliminate Duplicative IDA Sales Tax Exemption Reporting Requirement | This bill would eliminate the requirement for agents and project operators appointed by Industrial Development Agencies and Authorities (IDAs) to file form ST-340, Annual Report of Sales and Use Tax Exemptions Claimed by Agent/Project Operator of Industrial Development Agency/Authority (IDA) with the Tax Department. | No impact |
| PART Q | Enact Pass Through Entity Tax Flexibility | This bill would change the deadline for qualifying entities to elect to pay the Pass-Through Entity Tax (PTET) and the New York City Pass-Through Entity Tax (NYC PTET) from March 15th to September 15th of a given tax year. The bill would also make corresponding changes to the estimated payment deadlines. | Decrease business tax revenue by $3.045 billion in FY 2026 |
| PART R | Increase the Article 9-A Estimated Tax Threshold | This bill would increase the threshold at which corporation tax filers are required to make estimated tax payments, from $1,000 to $5,000. | Decrease business tax revenue by $84 million in FY 2026 and $144 million in FY 2027 |
| PART S | This bill would create an organ donation tax credit for taxpayers that, while living, donate one or more human organs for human organ transplantation. | This bill would create an organ donation tax credit and would allow full-year resident taxpayers a refundable tax credit for unreimbursed expenses related to the transplant including: (i) travel expenses; (ii) lodging expenses; and (iii) lost wages, not to exceed $10,000, in the tax year in which the living human organ transplantation occurs. | No impact in FY 2026, but would decrease annual business tax revenue by $1 million in FY 2027, FY 2028, and FY 2029 |
| PART T | Make Permanent the Estate Tax Three-Year Gift Addback Rule | make permanent the provision that requires gifts that are taxable for federal gift tax purposes and are made within three years of an individual’s date of death to be included when calculating the decedent’s New York gross estate. | No impact |
| PART U | Expand the Credit for Employment of Persons with Disabilities | This bill would increase the available tax credit for employers who employ persons with disabilities. | No impact in FY 2026, but would decrease annual business tax revenue by $2 million in FY 2027, FY 2028, and FY 2029 |
| PART V | Reporting of Federal Partnership Adjustments | This bill would amend the Tax Law to establish reporting requirements for federal partnership audit changes and administrative adjustment requests made pursuant to the federal centralized partnership audit regime established by the Bipartisan Budget Act of 2015. | No impact |
| PART W | Eliminate NYC PIT for Certain Filers | This bill would amend the Tax Law, establishing a credit against the tax on the personal income of certain NYC residents. | Would not affect All Funds revenue |
| PART X | Amend the NYC Relocation and Employment Assistance Program | This bill would amend the General City Law, enabling New York City to raise tax revenue. It would also amend the Administrative Code of the City of New York to authorize credits for relocation and employment assistance and make available relocation assistance credits per employees. | No impact |
| PART Y | Extend the Clean Heating Fuel Credit for Three Years | The bill would extend the clean heating fuel credit available to taxpayers under Articles 9, 9-A, and 22 of the Tax Law for purchases of bioheating fuel for residential purposes before January 1, 2029. The credit is equal to $.01 per percent of the biodiesel fuel, not to exceed 20 cents per gallon, purchased by the taxpayer. | No impact in FY 2026 or 2027, but would decrease business tax revenue by $5 million in FY 2028 and $5 million in FY 2029 |
| PART Z | Extend the Alternative Fuels and Electric Vehicle Recharging Property Credit for Three Years | This bill would allow taxpayers under Articles 9, 9-A, and 22 of the Tax Law to continue to be eligible for a credit for alternative fuel vehicle refueling and electric vehicle recharging property placed in service through tax years beginning before January 1, 2029. | No impact in FY 2026 or 2027, but would decrease business tax revenue by $3 million in FY 2028 and $3 million in FY 2029 |
| PART AA | Extend the Sales Tax Vending Machine Exemption for One Year | Currently, purchases of up to $1.50 of certain food or drink items from vending machines that accept only coin or currency are exempt from sales tax. Such sales from vending machines that are capable of accepting payment in a form other than coin or currency (“cashless” machines) are exempt if the sale price is $2.00 or less, regardless of whether that vending machine also accepts coin or currency. This bill would extend the current exemption through May 31, 2026. | Decrease business tax revenue by $8 million in FY 2026 and $2 million in FY 2027 |
| PART BB | Extend the Workers with Disabilities Tax Credit for Three Years | This bill would extend the workers with disabilities tax credit for an additional three years through tax year 2028. The credit provides tax incentives to qualified employers for employment of persons with disabilities. The tax credit is currently available through tax year 2025. | No impact in FY 2026 or 2027, but would decrease business tax revenue by $1 million in FY 2028 and $1 million in FY 2029 |
| PART CC | Extend the Hire a Vet Credit for Three Years | This bill would extend the hire a vet tax credit provided to taxpayers under Articles 9, 9-A, and 22 for hiring qualified veterans for an additional three years. The credit would be available through tax years beginning before January 1, 2029, for veterans who begin employment before January 1, 2028 | No impact in FY 2026 or 2027, but would decrease business tax revenue by $1 million in FY 2028 and $1 million in FY 2029 |
| PART DD | Extend the Musical and Theatrical Production Credit for Four Years | This bill would extend the musical and theatrical production credit for four years through tax year 2029 | No impact in FY 2026 or 2027, but would decrease business tax revenue by $8 million in FY 2028 and $8 million in FY 2029 |
| PART EE | Extend the Financial Institution Data Match System for Five Years | This bill would extend the authority of the Commissioner of Taxation and Finance to use the financial institution data match (FIDM) system for collection of fixed and final tax debts for five years. | No impact |
| PART FF | Amend and Simplify the Pari-Mutuel Tax Rate Structure | This bill would simplify the existing Pari-Mutuel Tax (PMT) rate structure by addressing the complexities in tax imposition, collection, and remittance, as well as distribution of monies; it would also amend the current archaic breakage rule. | No impact |
| PART GG | Temporarily Extend the Lowered Casino Slot Tax Rates | This bill would extend the lowered tax rate on slot machine gross gaming revenues for each commercial casino in Zone Two from April 1, 2026 through June 30, 2028, if certain conditions are met. | No impact in FY 2026, but would decrease tax revenue by $49 million in FY 2027, $49 million in FY 2028, and $12 million in FY 2029 |
| PART HH | Extend Authorized Use of Capital Funds by a Certain Off-track Betting Corporation for One Year | This bill would extend for one additional year the authorized non-capital use of capital acquisition funds by the Capital District Regional Off-Track Betting (OTB) Corporation (the Corporation). | No impact |
| PART II | Conduct a Study of Thoroughbred Fetlock Joint Injury Detection Through Advanced Imaging | This proposal seeks to fund a longitudinal study by the Cornell University College of Veterinary Medicine of the thoroughbred fetlock joint through advanced imaging | Increase All Funds revenue by $3 million in FY 2026, $6 million in FY 2027, $6 million in FY 2028, and $3 million in 2029 |