NYS Legislature proposing wide range of tax breaks in budget talks

ALBANY — A push by the State Legislature to deliver tax relief for homeowners and working families is running up against Gov. Kathy Hochul’s plans to keep state spending at bay.

Democrats, who control the State Senate and Assembly, included credits for taxpayers with children as well as property tax breaks in their election-year budget proposals.

“We know New Yorkers have faced incredible uncertainty in the last four years, and families are still feeling the effects of it,” Assembly Speaker Carl Heastie said in a statement provided to Newsday. The Assembly proposal sought to “relieve the tax burden on families and homeowners,” he said.

Senate Majority Leader Andrea Stewart-Cousins recently told reporters her conference is also focused on affordability. “We understand that working people, they need help, too, and we want to make sure as we push for affordability, we don’t leave anyone behind,” she said.

The Assembly and Senate tax break proposals come as all 213 legislative seats are up for election in November.

It’s common to see the push for homeowner rebates and breaks in an election year, said Ken Girardin, director of research for the Empire Center for Public Policy, a fiscally conservative think tank in Albany. “The suburbs are politically consequential areas, and the mentality in Albany has long been that sending checks to suburban voters right before an election helps incumbents stay in office.”

Negotiations between the Democratic governor and legislative leaders are in full force as the April 1 deadline for approval of the 2024-25 budget passed.

The proposed spending of the legislature, however, is significantly larger than the governor’s, with each house looking to add about $13 billion to Hochul’s $233 billion budget plan.

The legislature called for increasing revenue by raising the tax rate for top earners, a proposal Hochul has called a “nonstarter.”

The governor’s budget proposal did not include tax breaks or credits this year.

“I think the governor recognizes that the budget she agrees to this year is going to be the baseline for what are likely to be more difficult budgets in 2025 and 2026,” Girardin said. “A dollar of spending restraint this year is going to be worth a whole lot more if revenues fall short or there's a recession.”

Hochul spokeswoman Katy Zielinski said the governor will work with the legislature to ensure the final budget invests in New York’s future while “ensuring the state remains on a stable long-term fiscal trajectory.”

Here’s a look at proposed state tax breaks:

Homeowner rebate

Proposal: The Assembly proposed a one-year state property tax rebate, which homeowners would receive as a check this fall.

Who would benefit: It would go to households eligible for either the state School Tax Relief Program (STAR) or Enhanced STAR, and which have incomes of $250,000 or less. The amount of the rebate would be based on a percentage of a taxpayer’s STAR benefit, varied based on income level. Checks would not be provided if the benefit is less than $100.

Supplemental child credit

Proposal: The Assembly called for a one-time tax credit, allowing parents and guardians who already quality for the Empire State Child Credit to receive additional dollars.

Who would benefit: The current Empire State Child Credit provides eligible taxpayers a state credit based on a calculation of 33% of their federal child tax credit or $100 per qualifying child, whichever is greater. The Assembly’s proposal would provide additional tax breaks, based on what taxpayers received from the state child credit. Families with incomes under $10,000 would receive 100% of their state child credit; those earning between $10,000 and $24,999 would receive 75%; those earning between $25,000 and $49,999 would receive 50%, and those with incomes $50,000 and above would receive 25%.

Family tax credit

Proposal: The Senate plan would create a “Working Families Tax Credit” to replace and expand on the Empire State Child Credit.

Who would benefit: It would provide an annual $550 credit per child to single taxpayers earning under $75,000 and married taxpayers filing jointly making up to $130,000. The amount would decrease by $20 for each $1,000 of additional income made over these levels. Senate Finance Committee chairwoman Liz Krueger (D-Manhattan) told Newsday she believes both the Senate’s working families credit and the Assembly’s supplemental child credit are focused on getting dollars to the families that need it the most.

Expanded earned income tax credit

Proposal: The Assembly budget plan would expand the state’s Earned Income Tax Credit.

Who would benefit: The expansion would include taxpayers filing with a taxpayer identification number instead of a Social Security number, meaning immigrants who pay taxes. It also would extend the credit, increasing the range at which it phases out to $56,067, up from $49,084, for single filers with one child, and to $78,976, up from $66,819, for joint filers with three or more children. The expansion would continue to allow taxpayers to take advantage of the full credit as minimum wage increases.

Real property tax credit

Proposal: The Senate would extend the Real Property Tax Relief Credit for three years.

Who would benefit: The credit is designed to address high property taxes for those whose income is $250,000 or less. The maximum credit is $350. The proposal would lower the minimum credit allowed to $100 from $250 — allowing more taxpayers to receive the credit.

School supply tax exemption

Proposal: The Assembly budget proposal would exclude school supplies from sales tax for 15 daybefore the first Monday in September, Labor Day.

Who would benefit: Parents, guardians, students and teachers. The exemption would apply to supplies up to $110 per item.

Oral health product exemption

Proposal: The Assembly would create a sales tax exemption for oral care products.

Who would benefit: Consumers would save on toothbrushes, toothpaste and powders, mouthwash and dental floss, as well as other oral care products.