Governor Hochul Announces Budget Investments for Fiscal Year 2023 to Provide Tax Relief for New Yorkers

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Governor Kathy Hochul today announced several tax relief investments in the historic fiscal year 2023 budget. The approved budget includes tax relief for the middle class, small businesses and homeowners to provide more money for working families of the whole state. Key budget wins include lowering state fuel taxes as New Yorkers grapple with rising energy prices, accelerating the implementation of the tax cut for middle class, creating a tax credit for small business COVID-19 expenses, providing tax relief for small businesses, and a tax refund credit for homeowners.

“This budget provides much-needed tax relief to thousands of small businesses and millions of New Yorkers and lowers the tax burden for those who need it most,” Governor Hochul Mentioned. “In a post-COVID-19 era, New Yorkers will recover from the pandemic and lead the nation into an economic resurgence, and I applaud legislative leaders for working together to ensure this historic budget leaves no one behind. .”

To address the high cost of gasoline, which has increased in recent months as a result of the war in Ukraine, New York State will suspend the state fuel sales tax, the separate fuel tax and the Metropolitan Commuter Transportation District sales tax imposed on fuel from June to December, providing an estimated $585 million in assistance to working families and businesses across the state. To protect consumers, commuters and state infrastructure, the plan:

  • orders retailers to pass on all of these tax savings to consumers;
  • Transfers money from the General Fund to dedicated funds to compensate for estimated revenue lost due to the suspension of these taxes – ensuring that there is no negative financial impact for the MTA; and
  • Grants county governments the ability to cap the price at which their applicable local sales tax rate is charged, at $4 per gallon.

This state budget will accelerate tax relief for middle-class New Yorkers by implementing lower tax rates sooner, providing relief to 6.1 million New Yorkers. The reduction in tax rates is part of an eight-year phase-in of personal income tax reductions for middle-class taxpayers that began in the 2018 tax year and was scheduled to end with the 2025 tax year. This budget will allow for the full implementation of the tax relief that will take effect this year.

Small businesses have been particularly hard hit by the downturn in the pandemic. To continue state support for our small businesses, the state budget includes a new refundable tax relief program targeting COVID-19-related expenses for small businesses. The program provides up to $250 million in additional assistance to small businesses. Eligible COVID-19 related capital investments include, but are not limited to:

  • Costs associated with expanding space to accommodate social distancing
  • HVAC equipment
  • Expenses related to outdoor space expansions
  • Machines and equipment to facilitate contactless sales.

In addition, this state budget provides much-needed tax relief by increasing the small business subtraction amendment from 5% to 15% of net business income or nand farm income, and expands the benefit to include flow-through entities with less than $1.5 million in New York-source gross income. This proposal will help around 195,000 small businesses navigate one of the toughest business climates in modern history.

The state budget also creates a new property tax credit, the Homeowner Tax Rebate Credit for eligible low- and middle-income households, as well as eligible senior households. Under this program, Basic School Tax Relief (STAR) exemption and credit recipients with incomes below $250,000 and Enhanced STAR recipients are eligible for a refund of the property tax., where the benefit is a percentage of the owners existing STAR benefit.

Outside of New York, the average benefit will be nearly $970, providing relief to more than 2 million households that pay property taxes. The average New York City benefit will be about $425, with benefits reaching an additional 479,000 property-tax-paying households. For owners with an income below $75,000, the average statewide credit is estimated at nearly $1,050, benefiting approximately 837,800 recipients. The benefit will take the form of advanced credit, getting the benefits into the hands of New York homeowners faster. The credits will be an advance on tax returns for the 2022 tax year, which will be sent directly to eligible owners starting in the fall of 2022.

Together, these tax relief programs will provide meaningful support to New Yorkers as we emerge from the COVID-19 pandemic and rebuild our economy.

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