On April 20, 2024, 19 days after the April 1 deadline, New York Governor Kathy Hochul signed into law several bills, including A8809 / S8309 and A8806 / S8306 (collectively, the “Budget”), which enact into law New York State’s $237 billion budget for the fiscal years 2024–2025. Some of the more noteworthy, revenue-related provisions of the Budget are summarized below:

• Extension of itemized deduction limitation. Provides that individuals with adjusted gross income over $10 million will continue to be subject to an itemized deduction limitation of 25 percent of any Federal charitable contribution for taxable years ending before 2030.
• Clarification of the Metropolitan Commuter Transportation District (“MCTD”). Clarifies that, effective January 1, 2024, the Metropolitan Commuter Transportation Mobility Tax applies to the net earnings from self-employment of individuals attributable to the MCTD, including the counties of Dutchess, Nassau. Orange, Putnam, Rockland, Suffolk and Westchester. The tax is imposed at a rate of .34 percent if such earnings attributable to the MCTD exceed $50,000 for the tax year.
• Commercial security tax credit. Creates a security tax credit of $4,000–$6,000 for each eligible business retail location in the State. Eligibility is limited to employers of 50 or fewer on “qualified retail theft prevention measure expenses” including security officers, cameras and alarm systems.
• Commercial property tax incentives. Creates an affordable housing from commercial conversion incentive program. To be eligible, projects that convert non-residential buildings into eligible multiple dwellings must be commenced and completed by certain dates, and different projects may be classified within various tiers, with different incentives, depending on duration, location and other factors.
• Tax rate reduction for certain combative sports. Lowers the ticket tax from 8.5% to 3% (the same as for boxing and wrestling) for kickboxing, single discipline martial arts and mixed martial arts matches or exhibitions, effective December 1, 2024.
• Sales tax exemption extension. Extends for one year the sales tax exemptions including for tangible personal property and services sold between financial institutions and their subsidiaries (relating to the Dodd-Frank Protection Act).
• Amended tax return "loophole" closed. Permits the tax department to take action on amended returns (e.g., issuing a notice of deficiency) where the taxpayer has previously filed a petition with the Division of Tax Appeals for the tax year.

Perhaps of more interest is what did not make it into the Budget—tax rate increases on the highest earners in the State making over $5 million and over $25 million, the requirement that vacation rental marketplace providers collect sales tax on vacation rentals that they facilitate, the repeal of the sales tax exemption for private aircraft and boats valued over $230,000 and the State-level counterpart to the Federal Work Opportunity Tax Credit. In 2023, Governor Hochul vowed not to increase income tax rates in the 2024–2025 budget, and after weeks of negotiations with the Senate and House, that promise seems to have been kept.

On April 24, 2024, New York City Mayor Eric Adams announced his $111.6 billion executive budget (the “Proposal”) for the City for fiscal year 2025. Like the State Budget, the Proposal does not increase tax rates in the City. The Proposal does include climate budgeting (a process used to assess how the City’s investments impact the City’s ability to achieve climate goals), increased investments in the City’s CityFHEPS (rental assistance) program, forgiveness of $2 billion in medical debt for qualified individuals and grants to Small Business Improvement Districts. In addition, the Proposal restores funding for additional New York Police Department recruiting but does not restore the $24 million cut last fall from the City’s libraries. The City’s fiscal year 2025 budget is due June 30, 2024.

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