This year, the state of New York could see the beginning of the end of certain tax legislation. New York, as well as the general tri-state area, are facing significant shifts in tax policies that may have far-reaching consequences for businesses and residents alike. These changes could affect everything from income and corporate taxes to real estate regulations, with potential impacts on the local economy and affordability.
The Tax Cuts and Jobs Act set to expire this year
One of the most prominent legislative pieces coming to an end this year is the Tax Cuts and Jobs Act which is set to expire at the end of this year. The Act was first implemented in 2018, and Congress must now must decide whether to allow it to lapse, extend it, or make adjustments. This decision will have significant consequences for taxpayers, particularly those currently preparing their taxes.
Often referred to as a major tax reform, the act lowered tax rates, increased the standard deduction and child tax credit, and raised estate tax exemptions. However, it also imposed a $10,000 cap on the federal deduction for state and local taxes (SALT), which has notably affected New Yorkers and residents of other states with high taxes. How lawmakers choose to address the future of these provisions will influence tax strategies for many individuals and families.
“That was a big change for many middle-class and upper-class tax filers in 2017 and 2018,” said Jim Schnell, a tax partner with MMB + Co LLP. “That’s where your property taxes and your New York state income taxes were capped at an annual limit of $10,000 per year. For many people, that was a substantial change.”
With the Trump administration getting ready to take up office at the White House, many suspect that the Act will not get extended, as Trump has previously pledged to remove the cap. However, the decision ultimately rests with Congress According to the Tax Policy Center and Tax Foundation, removal of the cap would primarily benefit the highest income earners.
New 2025 legislative changes for the tri-state area
While New Yorkers (and the general nation) await to see what becomes of the Tax Cuts and Jobs Act, more immediate changes are happening this year in the tri-state area which are set to directly have an effect on these residents. Beginning January 1st, employers in New York will be required to provide at least 20 hours of paid time off for pregnant employees to attend medical appointments, such as sonograms.
In Connecticut, nearly all private-sector employers with 25 or more employees will be mandated to provide 40 hours of sick leave. This change expands the previous requirement, which applied only to employers with 50 or more workers. Meanwhile, in New Jersey, the state’s gas tax will increase by 2.6 cents per gallon, bringing the total tax rate to approximately 45 cents per gallon for drivers.
Exciting news for New York families for 2025
Governor of New York Kathy Hochul also recently announced that 2025 will bring increased workers’ compensation and Paid Family Leave benefits for workers, while continuing to deliver savings for businesses. Effective January 1, 2025, the minimum weekly benefit for workers’ compensation and the maximum weekly benefit for Paid Family Leave are set to increase, while the workers’ compensation assessment rate for employers drops.
“Hardworking New Yorkers shouldn’t have to worry about how they’ll buy food or pay rent when they need time off to care for a new child or family member with a serious health condition, or get injured on the job. Likewise, business owners who have their own bills to pay and families to support also need affordable solutions,” Governor Hochul said. “I’m proud that New York State is finding ways to put money back into the pockets of workers and those who employ them so both the economy and the people can thrive.”
