On Jan 1, Governor Kathy Hochul notified New Yorkers about a number of tax relief and affordability measures that started in the New Year.
As part of her upcoming full-year 2027 executive budget proposal, she will put forth legislation that removes state income taxes on up to $25,000 of tips in tax year 2026, which is according to federal guidance. The measures are part of Hochul’s Affordability Agenda.
“As we welcome in the New Year, affordability remains my top priority and I am doubling down on my commitment to put money back in New Yorkers’ pockets,” Hochul stated.
She added that “Starting today, tax rates for the vast majority of lower and middle-class New Yorkers will be cut, families with children will see a sweeping increase in the child tax credit, and minimum wage workers across the state will see their wages go up. I’m kicking the new year off with a proposal of no state income tax on tips, continuing my efforts to make New York more affordable for hard working New Yorkers."
According to The Hill, Republicans passed Donald Trump’s One Big Beautiful Bill Act that included a “no tax on tips” provision giving a maximum $25,000 deduction for tipped employees who make up to $150,000. The threshold for joint filers is $300,000. The legislation also provides a smaller maximum annual deduction for tax on overtime.
The Hill said that White House officials went against Hochul for not adopting the plan in New York State.
Hochul's most recent proposal to not tax tips is the latest in a series of her programs "to put money back in New Yorkers pockets," the release said.
These include middle class tax cuts, which, starting on Jan. 1 will give close to $1 billion in tax relief to over 8.3 million New Yorkers. There is also the expansion of New York’s child tax credit, offering key financial support for over 2.75 million children across the state.
Hochul also included increasing the minimum wage in her full-year 2024 enacted budget, Under this program, she established a plan to help lower-wage New Yorkers cope with the rising costs of living by increasing New York’s minimum wage for three years and tying future increases to inflation.
As part of her Affordability Agenda, Hochul also delivered a $2 billion Inflation Refund program, giving up to $400 to over 8.2 billion New Yorkers, and universal free school meals, which saved families in the state up to $1,600 a year.
These efforts are being implemented in a year where Hochul is seeking re-election as governor of New York. According to The Hill, she is running against Nassau County Executive Bruce Blakeman (R) in November. Blakeman got Trump’s endorsement just after Rep. Elise Stefanik .(R-N.Y.) dropped out of the Republican primary.