After enacting emergency budget extenders allowing for negotiations to continue past the April 1 due date, on May 28, 2026, Gov. Kathy Hochul signed into law the fiscal year 2026-2027 Budget Bill A10009/S09009. The bill included new provisions that are slated to help increase state revenue and close a $12 billion New York City budget deficit. Below are some of these impactful changes. 

One Big Beautiful Bill Act (OBBB) decoupling 

For New York State corporate income tax, personal income tax, and franchise tax on insurance companies, New York decouples from the following federal provisions: 

• IRC Section168(n): Effective for tax years beginning on or after Jan. 1, 2025, NYS decouples from federal 100% bonus depreciation of qualified production property. 
• IRC Section 174/ Section 174A: Effective for tax years beginning on or after Jan. 1, 2025, NYS decouples from federal 100% amortization of foreign and domestic research or experimental expenditures. In addition, effective for tax years beginning on or after Jan. 1, 2025, NYS decouples from federal 100% amortization of foreign and domestic research and experimental expenditures on any remaining expenses for years prior to Jan. 1, 2025. 

For New York City unincorporated business tax, general corporation tax, business corporation tax, and banking corporation tax, New York City decouples from the following federal provisions: 

• IRC Section 168(n): Effective for tax years beginning after Dec. 31, 2024, NYC decouples from federal 100% bonus depreciation of qualified production property. 
• IRC Section 179(a): Effective for tax years beginning after Dec. 31, 2024, NYC decouples from federal exclusion or deduction. 
• IRC Section 174A: Effective for tax years beginning after Dec. 31, 2024, NYC decouples from federal 100% amortization of domestic research or experimental expenditures. 
• IRC Section 163(j): Effective for tax years beginning on or after Jan. 1, 2025, NYC decouples from the increase in the amount allowed as a federal interest deduction.  

NYS corporate income tax 

Tax rates: The 7.5% tax rate for corporations with a business income base greater than $5 million is extended to tax years before Jan. 1, 2030. In addition, the 0.1875% tax rate for housing corporations subject to the capital base is extended to tax years before Jan. 1, 2030. 

Property taxes 

The signed bill includes a new surcharge on certain NYC properties, commonly referred to as the “pied-à-terre” tax. This new surcharge is effective July 1, 2026 for an owner of a covered property that is not the primary residence of such owner and will be imposed on one-to three family residences valued at $5 million or more, as well as condominiums and cooperative units (co-ops) valued at $1 million or more.  

Sales tax reregistration program  

The budget requires the commissioner of taxation and finance to create a reregistration program that is expected to be completed by Dec. 31, 2030. As part of this program, certain holders of current certificates of authority will be required to reregister. In addition, certain holders of a current certificate that receive a reregistration notice may be eligible for a reduction of penalties and interest.  

Personal income tax 

POWER (Protecting Our Wallets Energy Rebate) Program: Checks providing a total of $1 billion in relief from rising utility costs will be sent starting in the fall. The checks will be based on the 2024 tax return of each New Yorker as follows: 

• Joint filers with incomes of $150,000 or less will receive $200; 
• Joint filers with incomes between $150,000 and $300,000 will receive $150; and
• Single, married filing separate, and head of household filers with incomes of $150,000 or less will receive $100. 

Taxes on tips: New York will conform to the federal deduction on income earned from tips (IRC Section 224) for tax years beginning on or after Jan. 1, 2026. An exclusion from income from tips up to $25,000 is allowed. 

New York State Child and Dependent Care Credit: A new credit is created for tax years beginning on or after Jan. 1, 2026 to provide eligible taxpayers with qualifying dependents a credit. Though there is a similar credit for tax years prior to Jan. 1, 2026 this new credit separates from the federal credit as a base and will instead provide an enhanced benefit of up to 55% of qualifying expenses for low-income households.  

Charitable contributions: Part C of the budget clarifies that for tax years beginning on or after Jan. 1, 2026, contributions to an exempt organization that was approved for exempt status before Jan. 1, 2025 by the IRS will continue to qualify even if the IRS revokes the entity’s exempt status. Such contribution will continue to be exempt if the organization “establishes that the revocation was unrelated to the organization’s charitable mission” and that it continues to meet the statutory requirements under IRC Section 501(c)(3). 

IRC 962(d) modification: The bill adds a subtraction modification for any distribution included in federal adjusted gross income under IRC Section 962(d) for tax years beginning on or after Jan. 1, 2026. 

Other credits and incentives  

Commercial Security Tax Credit: The credit will now be available for taxable years beginning before Jan. 1, 2029. 

NYC Musical and Theatrical Production Credit: The budget increases the aggregate amount of tax credits allowed from $400 million to $550 million effective immediately for qualifying production companies whose first performance was on or after Dec. 1, 2025.

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