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News

Governor Hochul's Tax Plans Aim to Ease Costs for New Yorkers in 2025

By:
Emma Slack-Jorgensen
Published Date:
Jan 15, 2025

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New York Governor Kathy Hochul’s 2025 State of the State address outlined her policy priorities, many of which have direct implications for accounting professionals and taxpayers in New York.

With a focus on affordability, Hochul's proposals include middle-class tax cuts, direct rebate payments and housing initiatives that could influence New Yorkers' tax planning and financial strategies.

One of Hochul’s headline proposals is a $1 billion tax cut affecting five of New York’s nine tax brackets. Joint filers earning up to $323,200 would see reduced tax rates, although the details indicate that the cut will be implemented in phases. "I'm calling for a sweeping middle-class tax cut," Hochul said. "The tax cut I propose today and will fight for in the coming months will deliver the lowest tax rates in seven decades and save hardworking tax payers $1 billion." When these changes are fully phased in, the middle class tax cut will give hundreds of dollars in average savings to roughly 77% of filers, which represents three out of every four taxpayers.

Additionally, Hochul announced a $3 billion inflation rebate program, offering one-time payments of $300 to $500, depending on an individual's income and filing status. "That's why I proposed the nation's very first-ever inflation refund....I'm talking about seniors, recent grads, families bringing in less than $300,000 a year. This makes a difference," Hochul noted.

Joint tax filers who make $300,000 or less will get a $500 payment and all single New York taxpayers making $150,000 or less will get a $300 payment. For accountants and tax preparers, these changes underscore the importance of staying informed about evolving tax brackets and new credits as they roll out.

Families with children may benefit from a significant expansion of the state’s child tax credit. "Families with children need additional relief...I know personally that the earliest years are the most expensive," explained Hochul, proposing increasing the credit to $1,000 per child under age four and $500 per child aged four to 16, phased in over two years. The hike in child credit is the biggest rise in the credit's history, considerably increasing the current maximum of $330 for every child. This initiative aligns with Hochul's broader push for affordability, particularly for working families, and may influence year-end tax planning for clients.

On housing, Hochul’s plan includes a 75-day waiting period before institutional investors can bid on single- and two-family homes. This proposal aims to curb private equity’s dominance in the housing market and create more opportunities for individuals. Additionally, her $100 million Pro-Housing Supply Fund is designed to bolster infrastructure for new developments.

Hochul also addressed the ongoing challenge of the State and Local Tax (SALT) deduction cap. She pledged to advocate for its removal, which could provide significant relief to taxpayers in high-tax areas like New York. The 2025 State of the State Book reads, "With key provisions of the Tax Cut and Jobs Act, including the SALT cap, set to expire in 2025, Governor Hochul is committed to working with New York's congressional delegation to restore full SALT deductibility and ensure a fairer tax code for New York's families."