Proposed middle class tax cut would bring New York rates to lowest levels in decades

New York’s Staten Island — A new plan to lower income tax rates might soon result in larger paychecks for millions of middle-class New Yorkers.

During her 2025 State of the State address on Tuesday, Governor Kathy Hochul proposed lowering income taxes in five of the state’s nine tax bands.

According to the governor’s office, the proposed tax cut would lower New York’s income tax rates to their lowest level in almost 70 years and provide about $1 billion in tax relief to over 8.3 million residents.

Because grocery prices are on the rise, Hochul said, families shouldn’t have to worry about whether they can afford to put food on the table. One of my main goals has been to make New York more affordable, and in order to fulfill this promise, I’m putting forward a sizable tax cut for middle-class New Yorkers to help them cope with the effects of inflation.

The lower tax rates, which would save taxpayers up to $323,000 for joint filers, would go into effect for the current tax year and be instantly reflected in New Yorkers’ paychecks if they are approved.

Hochul’s 2025 State of the State address addressed a number of affordable initiatives, including the proposed tax cut.

New Yorkers who pay taxes would receive almost $3 billion in payments from the governor’s proposed first-ever inflation refund check.

Families earning up to $300,000 annually would receive a $500 check under the proposal, while New Yorkers earning up to $150,000 annually would receive a $300 payment.

The governor’s office estimates that 8.6 million New Yorkers, including about 3.6 million who reside in New York City, will receive the one-time payouts.

The checks will be paid out of surplus sales tax revenue, which has increased historically in the state in recent years as a result of high inflation rates.

The payments are anticipated to be made in the fall of 2025 if they are authorized by the state assembly.

The largest extension of the state’s child tax credit in New York history has also been suggested by the governor.

Under the governor’s proposal, the maximum credit per kid would rise from $330 to $1,000 for children under four and to $500 for those between four and sixteen.

The state projects that the average credit awarded to families will quadruple under the proposal, from $472 to $943.

With the $1,000 credit for children under four available for the 2025 tax year and the $500 credit for families with children over four for the 2026 tax year, the enhanced benefit would be phased in over a two-year period.

Under Hochul, who previously extended the program to encompass children under the age of four through the state’s Fiscal Year 2024 budget, this would be the second significant extension of the Empire State Child Credit, if granted.

For the first time in the history of the state, another plan would offer free breakfast and lunch to all New York kids, irrespective of their family’s financial situation.

All 2.7 million children in the state will receive two free lunches every day if the idea is approved, saving families an estimated $165 per child in monthly food expenses.

Given that hunger can lead to children being distracted and acting out in class, studies have shown that offering free meals can enhance attendance, test results, and classroom behavior.