The New York Legislature has passed a budget bill with many tax changes, including Internal Revenue Code (IRC) conformity amendments. The conformity amendments address changes to federal tax law in the Tax Cuts and Jobs Act (TCJA).
Taxes affected by the budget bill include corporate franchise, personal income, property, sales and use, and others.
When enacted, the bill will:
- create an optional employer compensation expense program (ECEP), under which employers would be subject to a tax on annual payroll expenses exceeding $40,000 per employee and a corresponding credit would be allowed;
- create state-operated charitable contribution funds to accept donations, which can be claimed as itemized deductions (in addition, taxpayers making a donation will be allowed a state tax credit equal to 85% of the donation amount for the tax year after the donation);
- authorize school districts and other local governments to create charitable funds and donations to these funds provide a reduction in local property taxes (via a local credit) equal to a percentage of the donation;
- expand the definition of exempt CFC income to encompass repatriated income received from a corporation not included in a combined report with the taxpayer;
- require addbacks for the amount of federal deductions allowed under IRC Sec. 965(c) or IRC Sec. 250(a)(1)(A);
- provide that the subtraction for deemed dividends under IRC Sec. 78 applies to the extent that the dividends are not deducted under IRC Sec. 250;
- enact a surcharge on for-hire vehicles south of 96th Street in Manhattan ($2.75 for-hire vehicles, $2.50 for yellow cabs, and $0.75 for pooled trips);
- maintain the standard deduction for single filers;
- eliminate the requirement that taxpayers can itemize on their New York return only if they itemize on their federal return;
- create state modifications for alimony and qualified moving expense reimbursements and moving expenses;
- extend provisions of the state’s commercial and homeowner rehabilitation tax credit programs and allow the commercial credit to be used independently of the federal credit;
- extend and enhance various other credits;
- grant a resale exclusion to restaurants, cafeterias, caterers and others when purchasing prepared food and beverages for resale;
- convert the existing sales tax credit or refund for certain drugs and medicine used by veterinarians or farmers for livestock or poultry used in farm production to an upfront exemption;
- provide relief from sales tax responsible person liability to certain minority members of limited partnerships or limited liability corporations (LLCs);
- extend the property tax assessment ceiling program for telecommunications property by four years, to January 1, 2023. Also, extend and restructure the transitional provisions of the program so changes will be phased in gradually; and
- make various revisions to the school tax relief (STAR) program, including making participation in the STAR Income Verification Program (IVP) mandatory for Enhanced STAR recipients.
The text of the bill is available at http://assembly.state.ny.us/leg/?bn=s7509.
The Governor’s press release is available at https://www.governor.ny.gov/news/governor-cuomo-announces-highlights-fy-2019-budget.
S.B. 7509, as passed by the New York Legislature on March 30, 2018; Press Release, New York Governor’s Office, March 30, 2018; Governor’s Memorandum in Support, New York Division of the Budget