ALBANY, N.Y. (NEWS10) — New York Governor Kathy Hochul gave her State of the State address on Wednesday outlining her proposals for her legislative agenda in 2022. One of her proposals is investing in New York’s people, including providing tax relief for small businesses and the middle class.
Since the COVID-19 pandemic, Hochul said New Yorkers, especially small businesses, have been struggling to recover. About 71% of small businesses still report negative effects from the pandemic.
Governor Hochul wants to provide a range of relief designed to help millions of middle-income New Yorkers and hundreds of thousands of small businesses.
Provide $100 million of relief for 195,000 small businesses
Small businesses suffered hard during the pandemic. Hochul is pushing to provide $100 million in tax relief for 195,000 small businesses. This is to help them keep their doors open and weather what will come in the next few months.
This relief would come from increasing a tax return adjustment (known as a “subtraction modification”) that reduces a small business’s gross taxable income, as well as from widening eligibility to more entities. A subtraction modification allows a business entity to lower its gross income by an amount equal to a certain percentage of its net income, before calculating the amount of taxes owed.
Current law allows for a 5% subtraction modification for sole proprietorships and farm businesses with incomes of less than $250,000, benefitting 5,000 taxpayers each year. Hochul wants to raise this modification and include other entities with New York source gross income of up to $1.5 million.
Accelerate $1.2 billion in middle-class tax cuts for 6 million New Yorkers
In 2018, New York State began phasing in a middle-class tax cut, which is scheduled to stretch out through 2025. The original timeline did not take into account the pandemic and the rising inflation. Hochul proposes to accelerate the relief and start providing the full benefit of the tax cut two years earlier, fully phasing-in the 2018 middle-class tax cut beginning in the 2023 tax year.
Deliver a $1 billion property tax rebate for 2 million families
As inflation rises and the economic impact of the pandemic lingers, Hochul wants to provide relief through a property tax rebate program that returns 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. Eligible homeowners would receive their benefit in 2022.
Increase existing tax credits and create a new credit to support food production
Hochul proposes to increase an existing farm workforce tax credit and create a new one, while also expanding an investment tax credit for equipment that would complement the workforce and address shortages.
- Increase the farm workforce retention tax credit. Farm owners and employers are currently eligible to receive a refundable tax credit per eligible farm employee through 2024. To help farms retain their workers, the state wants to double the amount per eligible employee and extend the program to 2025.
- Create a new overtime tax credit. The state wants to create a permanent refundable tax credit on overtime hours for any size farm in the state, to offset increasing costs to farmers.
- Increase the investment tax credit. Hochul proposes to increase the existing investment tax credit at the end of 2022 for all state farms, allowing farmers to purchase new equipment