Tax provisions in the 2025 New York Budget

ALBANY, N.Y. (NEXSTAR) — New York’s 2025 to 2026 budget cuts taxes for many households while adjusting the rates for other tax scenarios. It creates a one-time inflation refund for eligible earners and increases child tax credits, but it also keeps an extra high-income surcharge in place for the wealthiest residents.

Below you'll find a bill-by-bill breakdown of the tax-related provisions (cuts, refunds, rebates, credits, deductions, increases, or structural code changes) in the Fiscal Year 2025 budget bills. Each of the measures comes from the official bill text.

S3005C/A3005C: Public protection and general government

• This bill repeals language letting taxpayers contribute to political campaigns via their tax forms. The New York State campaign finance fund checkoff, originally created in 2020, lets New Yorkers contribute $1 of any refund to public campaign financing. The budget strikes that provision and repeals the check-off entirely.

S3006C/A3006C: Education, labor, and family assistance

This bill includes the following tax-related changes:

• A new partial exemption lets certain non-profits or community land trusts sell residential property to a low-income homebuyer with lower property taxes. The tax exemption would range from 25% to 50% "of the assessed value of the property.” Still, local governments have to enact a local law to adopt the exemption.
• A reduced tax on limited-profit housing projects lowers the mandatory real estate tax based on rent. Previously, this “shelter rent tax” was at least 10% of gross annual rent. For those limited-profit housing projects in New York City, new language caps it at no more than 5%. Elsewhere, local boards can further reduce it to 5% or less, thereby cutting taxes on qualifying affordable housing projects.
• A statewide “redevelopment inhibited” tax exemption lets localities “provide for the exemption of real property from taxation.” The exemption was previously limited to only certain cities. The change in structure lets any local government grant the residential redevelopment exemption on any qualifying rehabilitated housing.

S3007C/A3007C: Health and mental hygiene

• This bill enacts a tax increase in the health care industry. The new managed care provider tax, or MCO tax, imposes an assessment on health plans offering Medicaid, Child Health Plus, Essential Plan, marketplace exchange, or other health coverage. The law creates a new tiered provider tax, raising revenue for the state’s Health Care Transformation Fund from the Medicaid/managed-care sector. The tax is levied on a per-member-month basis. For example, for Medicaid plans, it starts at $126 per Medicaid member-month if the plan has under 250,000 members. Then, it's $88 if between 250,000 and 500,000 members and $25 if over 500,000. Lower rates apply to Essential Plan enrollees ($7 or $13) and other exchange coverage ($1.50 or $2).

S3008C/A3008C: Transportation, economic development, and environment

This bill makes several tax-related amendments:

• The bill commits $6 billion—$3 billion each from the state and New York City—to the Metropolitan Transit Authority's 2025 to 2029 capital plan. It allows using part of the 4% metro sales tax revenue to fund the MTA Capital Assistance Fund.
• It also extends a transit tax increment financing law meant to expire in 2025 to April 1, 2035, continuing that financing for MTA projects for 10 more years. Local tax increment financing programs let localities capture incremental property taxes for redevelopment.
• MTA labor-dispute tax provisions tied to strike financing also get extended to 2027 instead of sunsetting in 2025.
• Also, the bill creates a new tax exemption to encourage the sale or gift of property like open space, parkland, or a historic site to a qualified nonprofit land trust or conservation organization to protect that property from development. A landowner who donates or sells a forest, wetland, battlefield, or similar property to a certified conservation group would owe less under the Real Estate Transfer Tax law.

S3009C/A3009C: State fiscal plan, tax and revenue act

This sprawling bill enacts dozens of tax provisions:

• The “inflation relief” credit gives a one-year benefit to full-year New Yorkers who made below $300,000 in 2023 if married or below $150,000 if single. Joint filers get $500, and others get $300 applied to their 2025 tax bill.
• For tax year 2025, the Empire State Child Tax Credit increases to $330 per child aged 4 through 16 and $1,000 per child through age 3. For tax year 2026, it will increase to $500 for kids over 3.
• The bill cuts New York's middle-class income tax rates by 0.1%. That means that for the bottom bracket, up to $17,150, a 4% rate becomes 3.9%, and in the next bracket up, 5.5% becomes 5.4%.
• The bill also includes some income tax rate increases on high earners. Income between $2,155,350 and $25 million will now be taxed at 10.3%, previously 9.65%.
• It also raises the requirement for filing estimated personal income tax from $3,000 to $5,000 starting in 2026.
• The bill also changes the Metropolitan Commuter Transportation Mobility Tax, making more employers subject to it. Plus, it raises the MCT tax rate from 0.34% to 0.75% starting mid-2025.
• Large real estate firms that own 10 or more one- or two-family homes can't deduct depreciation or mortgage interest anymore when calculating state tax on rentals. Such landlords lose two major tax breaks for small residential properties and can only claim interest deductions if they sell to someone who will live there or a nonprofit that creates affordable housing.
• The budget includes a rewrite of the New York homeowners’ property tax credit, replacing old, flat brackets with a new formula based on property tax burden as a percentage of adjusted gross income.
• For STAR property tax exemptions, the bill lets taxpayers who have already filed supporting statements for three years and proved eligibility qualify without having to refile annually.
• This budget bill also raises the statewide annual cap on the Low-Income Housing Tax Credit to $247 million from $217 million.
• It also increases the historic rehabilitation credit to match the federal credit at 100% for standard projects and 150% for “small” projects without the usual 5-year proration. That's up from the previous 25%.
• The bill creates a Semiconductor Workforce Training credit so businesses can get 75% back on costs for employee training—including wages—capped at $25,000 per employee. The credit can be up to $5 million per semiconductor business or $1 million for other businesses.
• It also establishes a 15% investment tax credit for qualified semiconductor research and development.
• The bill also creates a new tax credit for organ donors.
• It introduces a higher tax on sports betting by New York residents, imposing a 1% “market origin” fee on multi-jurisdictional wagers on top of the existing 5%.
• The Geothermal Energy System Tax Credit refund option also changes to let taxpayers—making under $180,000 if filing jointly or $90,000 if single—take any unused credit as an immediate refund.
• A vending machine sales tax exemption for low-price food and drink was also expanded through 2026.
• Farm Worker Retention and Farm Overtime Credits also get extended beyond 2025.
• Expirations for the Alternative Fuels, Electric Vehicles, and Clean Heating Fuel Credits all got pushed back to 2028.
• The Workers with Disabilities and Hire-a-Veteran tax credits also got extended from 2026 to 2029.
• The bill also expands and delays the expiration of film, television, musical, and theatrical production tax credits.
• And the budget also lowers the wage cap on the Disability Employment Credit. It was 35% of up to $6,000 of an employee’s first-year wages, but now it's the first $5,000. That means the maximum credit dropped from $2,100 to $1,750.