Keeping New York Economically Competitive

TOP Keeping New York Economically Competitive
Protect New Yorkers from Federal Tax Changes
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The recently enacted federal tax law has negative fiscal implications for many New Yorkers. By gutting the deductibility of state and local taxes, the law effectively raises middle class families' property and state income taxes by 20 to 25 percent. New York is fighting back against the federal plan and the loss of both income tax deductibility and property tax deductibility. To combat the assault, the FY 2019 Budget: 

  • Expands Charitable Contributions to Benefit New Yorkers: The FY 2019 Budget creates two new state-operated Charitable Contribution Funds to accept donations for the purposes of improving health care and education in New York. Taxpayers who itemize deductions may claim these charitable contributions as deductions on their Federal and State tax returns. Any taxpayer making a donation may also claim a State tax credit equal to 85 percent of the donation amount for the tax year after the donation is made. In addition, the legislation authorizes school districts and other local governments to create charitable funds. Donations to these funds would provide a reduction in local property taxes (via a local credit) equal to a percentage of the donation.

 

  • Creates Alternative Employer Compensation Expense Program: While Federal tax reform eliminated full State and local tax deductibility for individuals, businesses were spared from these limitations. Under the FY 2019 Budget employers would be able to opt-in to a new ECEP structure. Employers that opt-in would be subject to a 5 percent tax on all annual payroll expenses in excess of $40,000 per employee, phased in over three years beginning on January 1, 2019. The progressive personal income tax system would remain in place, and a new tax credit corresponding in value to the ECEP would cut the personal income tax on wages and ensure that State filers subject to the ECEP would not experience a decline in take-home pay.

 

  • Decouples from Federal Tax Code:  The FY 2019 Budget decouples the state tax code from the federal tax code, where necessary, to avoid more than $1.5 billion in State tax increases brought solely by increases in federal taxes.
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Continue the Phase-In of the Middle Class Tax Cut
Continue the Phase-In of the Middle Class Tax Cut
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The Budget supports the phase-in of the middle class tax cuts. In 2018, average savings will total $250 and, when fully effective, six million New Yorkers will save an average of $700 annually. Once fully phased in, the new rates will be the lowest in more than 70 years - dropping from 6.45 to 5.5 percent for incomes ranging from $40,000 - $150,000 and 6.65 to 6 percent for incomes ranging from $150,000 - $300,000. The new lower tax rates will save middle class New Yorkers $4.2 billion, annually, by 2025.

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Grow County-Wide Shared Services Initiative
Grow County-Wide Shared Services Initiative
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New York State will build on progress to reduce local property taxes for millions of New Yorkers and take the next step forward to provide local governments with new tools to put money back in the pockets of middle-class families. The FY 2019 Budget includes $225 million to fund the State's match of savings from shared services actions included in property tax savings plans. The Budget also continues the county-wide shared services panels for another three years and amends a statutory hurdle that prevented localities from sharing some specific services.   

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Create a Voluntary Retirement Savings Program
Create a Voluntary Retirement Savings Program
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The Budget authorizes the New York State Secure Choice Savings Program - a voluntary-enrollment payroll deduction IRA for employees of private employers that do not already offer retirement savings plans. This program will give millions of New Yorkers who currently have no access to an employer-provided retirement plan the opportunity to save for retirement, all while alleviating the burdens on participating New York employers of creating and sponsoring a retirement plan on their own. Participation is voluntary for businesses and employees. 

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Continue the Local Property Tax Relief Credit
Continue the Local Property Tax Relief Credit
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The Property Tax Credit, enacted in 2015, will provide an average reduction of $380 in local property taxes to 2.6 million homeowners this year alone. By 2019, the program will provide an additional $1.3 billion in property tax relief and an average credit of $530.

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