$100 Million in Tax Relief for 195,000 Small Businesses Across the State
Accelerates Middle-Class Tax Cut to Provide Relief for 6.1 Million New Yorkers by 2023
New Property Tax Rebate Program to Deliver Additional Relief for Two Million Low and Middle Income New Yorkers
New and Expanded Tax Credits to Support New York Farm’s Grappling with Rising Costs, Employee Retention and to Provide Capital for New Equipment
Governor Kathy Hochul today announced new efforts to deliver tax relief for thousands of small businesses and millions of middle class New Yorkers as part of the 2022 State of the State. The plan will provide $100 million in tax relief for 195,000 small businesses through increasing a tax return adjustment to reduce small businesses’ gross business income. The plan will also accelerate the implementation of $1.2 billion in New York’s existing Middle Class Tax Cut for 6 million New Yorkers which first began to be implemented in 2018, and establish a $1 billion property tax rebate program to put money back into the pockets of more than 2 million New Yorkers who have had to endure rising costs as the pandemic has progressed.
Additionally, the Governor will create new, and increase existing, tax credits to support New York’s farms and food production overall.
“As we continue to grapple with the impacts of COVID-19, we must ensure we are investing in our state’s most valuable resource: its people,” Governor Hochul said. “Millions of New Yorkers, particularly small business owners, middle class families, and our senior communities, have been hit hard by the economic devastation of the last two years, and they need our help. We must accelerate our recovery by not only reducing the tax burden, but also finding ways to put money back into the pockets of the New Yorkers who support our economy.”
From the depths of the COVID-19 economic downturn to today, New York has recovered some 1.2 million jobs, and in early December, Governor Hochul announced an initiative to connect New Yorkers to 220,000 jobs and signed legislation to increase New York State’s support for recovering small businesses.
New York State’s economic recovery is not over. The State’s unemployment rate is 6.6 percent – more than two points higher than the national rate. Some 71 percent of small businesses still report negative effects from the pandemic. As of July, earnings remained below pre-pandemic levels in seven of New York’s 13 major job sectors.
To accelerate the economic recovery and deliver relief to New Yorkers, Governor Hochul will:
- Provide $100 Million of Relief for 195,000 Small Businesses: While the pandemic downturn impacted all of us, small businesses suffered especially hard. To boost recovery across the state, Governor Hochul will provide $100 million in tax relief for 195,000 small businesses by widening eligibility and increasing a tax return adjustment that reduces a small business’s gross income. In simple terms, a subtraction modification allows a taxpayer to lower its gross income by an amount equal to a certain percentage of its net business income, before calculating the amount of taxes owed. Current law allows for a 5 percent subtraction modification for sole proprietorships and farm businesses with incomes of less than $250,000 — benefitting just 5,000 taxpayers each year. The Governor will raise this modification and include other entities with New York source gross income of up to $1.5 million, covering some 195,000 small businesses in all — putting more money back in the hands of more hard-working New Yorkers.
- Accelerate $1.2 Billion in Middle Class Tax Cuts for 6 Million New Yorkers: In 2018, New York began phasing in a middle-class tax cut, and the cut is not currently scheduled to be fully implemented until 2025. To reflect the economic devastation brought on by COVID-19 and rather than waiting for small, incremental benefits to take effect for middle class taxpayers, Governor Hochul will accelerate relief for families and start providing the full benefit of the tax cut two years earlier – fully phasing-in the middle class tax cut beginning in the 2023 tax year, the earliest time possible. Applying the full effective cut to the 2023 tax year will accelerate two years of tax cuts, providing relief for 6.1 million New Yorkers.
- Deliver a $1 Billion Property Tax Rebate for More Than 2 Million New Yorkers: With New Yorkers facing the costs of inflation in the supermarket and at the pump, all while still enduring the economic impacts of COVID-19, Governor Hochul will provide much needed relief through a property tax rebate program that will return tax dollars to middle- and low-income households. More than 2 million New Yorkers will be eligible for the rebate, with low-income households and seniors receiving higher benefits. Under the Governor’s plan, eligible homeowners will receive their benefit in the Fall of 2022, to the tune of $1 billion.
- Increase Existing Tax Credits and Create a New Credit to Support Food Production: Farm labor is among the fastest-growing costs of agricultural production in New York. To help farms meet this challenge, Governor Hochul will increase an existing workforce tax credit and create a new one, while also expanding an investment tax credit for equipment to complement the workforce and address shortages. This includes:
- Doubling the Farm Workforce Retention Tax Credit: Farm owners and employers are currently eligible to receive a refundable tax credit of a fixed dollar amount per eligible farm employee through 2024. To help farms retain their workers, the State will double the yearly fixed dollar amount per eligible employee and extend the program to 2025.
- Creating a New Overtime Tax Credit: The State will create a permanent refundable tax credit on overtime hours for any size farm in New York State, to offset increasing costs to farmers.
- Increase the Investment Tax Credit: The investment tax credit has been a powerful tool in the past to stimulate investments in new technology and equipment. New York will increase the existing investment tax credit for all State farms, allowing farmers to purchase new equipment that could further automate their farms in response to the declining agriculture workforce.