The FY 2019 Budget creates a new state-operated Charitable Contribution Fund to accept donations for the purposes of improving health care and public education in New York State. 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. Taxpayers may also make qualified contributions to certain not-for-profit organizations for specified purposes.
The FY 2019 Budget authorizes local governments to establish charitable gift reserve funds and to offer real property tax credits to incentivize contributions to these new local charitable funds. Under the law, such funds may receive unrestricted charitable contributions for the purposes of addressing education, health care, and other charitable purposes. This is an optional program available to counties, cities, towns, villages and school districts. Local governments and school districts may also establish charitable funds and offer real property tax credits to incentivize contributions to these new local charitable funds. These funds will help support vital government activities while also helping preserve the tax deductibility that our tax system was built on. Learn more about this 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.
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.
Additionally, in December 2018, Governor Cuomo signed legislation to protect non-profits from a tax hike resulting from the federal tax bill. This legislation decouples the New York State tax code from a change made to the federal Unrelated Business Income Tax by the Federal Tax Cuts and Jobs Act, which considered the amount paid or incurred by any non-profit employer for commuter benefits, such as transit or parking, as taxable income. Learn more.
Governor Cuomo will also propose legislation to further decouple New York State's tax code from the federal code if President Trump moves forward with a plan for a $100 billion capital gains tax cut. Read more.