ALBANY, N.Y. (WWTI) — The FY 2023 Budget that was passed on Saturday includes tax relief investments for New Yorkers.
The budget includes tax relief for the middle class, small businesses and homeowners. Relief from the state taxes on motor fuels, accelerating the implementation of the middle-class tax cut, creating a tax credit for small businesses’ COVID-19 related expenses, providing small business tax relief and a homeowner tax rebate credit are all pieces of the budget.
“This Budget provides much-needed tax relief for thousands of small businesses and millions of New Yorkers and reduces the tax burden for those who need it most,” Governor Hochul Said. “In a post COVID-19 era, New Yorkers will recover from the pandemic and lead the nation in an economic resurgence, and I applaud the legislative leaders for their collaboration to help ensure this historic budget leaves no one behind.”
To address the high cost of gasoline, which has surged in recent months as a result of the war in Ukraine, New York State will suspend the state sales tax on motor fuels, the separate motor fuel tax and the metropolitan commuter transportation district sales tax imposed on motor fuels from June through December, providing an estimated $585 million in relief for working families and businesses statewide.
- Directs retailers to pass the entirety of this tax savings to consumers;
- Transfers money from the General Fund to the dedicated funds to offset the estimated revenue lost from suspension of these taxes – ensuring no negative financial impact for the MTA; and
- Grants county governments the option to cap the price their applicable local sales tax rate is imposed on, at $4 per gallon.
The budget will accelerate tax relief to middle-class New Yorkers by implementing reduced tax rates early, providing relief to 6.1 million New Yorkers. The reduced tax rates are part of an eight-year phase-in of personal income tax cuts for middle-class taxpayers which commenced in Tax Year 2018 and was scheduled to be completed with the 2025 Tax Year. The budget will allow for the full implementation of the tax relief to take effect this year.
Small businesses were hit particularly hard by the pandemic downturn. The 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 relief 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
- Machinery and equipment to facilitate contactless sales.
The budget increases the small business subtraction modification from 5% to 15% of net business income or net farm income, and expands the benefit to include pass-through entities with less than $1.5 million in NY-source gross income. The proposal will aid an estimated 195,000 small businesses.
The budget also creates a new property tax relief credit, the Homeowner Tax Rebate Credit for eligible low- and middle-income households, as well as eligible senior households. Under the program, basic School Tax Relief exemption and credit beneficiaries with incomes below $250,000 and Enhanced STAR recipients are eligible for the property tax rebate, where the benefit is a percentage of the homeowners’ existing STAR benefit.
Outside of New York City, the average benefit will be nearly $970, providing relief to more than 2 million property tax-paying households. The New York City average benefit will be about $425, with benefits reaching another 479,000 property tax-paying households. For homeowners with income below $75,000, the statewide average credit is estimated at nearly $1,050, benefiting an estimated 837,800 recipients.
The benefit will be in the form of an advanced credit, getting benefits in the hands of New York homeowners more quickly. Credits will be an advance on Tax Year 2022 income tax returns, to be directly sent to eligible homeowners beginning in Fall 2022.