New York Governor Hochu announced a series of tax cuts and relief measures that took effect immediately with the start of the 2026 tax year on January 1st. He also previewed legislative proposals to be included in the upcoming 2027 fiscal year budget, which would suggest exempting up to $25,000 in state income tax for tips earned by individuals during the 2026 tax year, in alignment with federal guidelines.
This new proposal is part of Hochu’s Affordability Agenda. Since taking office, she has implemented several policies that have collectively reduced tax and living burdens for New York families by over $9 billion.
Hochu stated, “Affordability remains my top priority as we welcome the new year. I am redoubling efforts to put more money back into the pockets of New Yorkers. Starting today, tax rates for most low-to-middle income taxpayers will be reduced, families with children will receive significantly increased child tax credits, and the state’s minimum wage will also be raised. The ‘tip-tax free’ proposal will mark a new beginning in the new year, ensuring that hardworking New Yorkers can live more comfortably.”
In the 2026 fiscal year budget already passed, Hochu successfully pushed through a middle-class tax cut plan that took effect on January 1, 2026, providing nearly $1 billion in tax relief to over 8.3 million New York residents. This measure applies to joint filers with household incomes not exceeding $323,000 annually.
Once fully implemented, approximately 77% of taxpayers (equivalent to three out of every four taxpayers) are expected to save hundreds of dollars on average each year.
In the 2026 fiscal year budget, Hochu continued to expand New York State’s child tax credits to provide more direct economic support to over 2.75 million children statewide. The new plan will double existing tax credits, with some families even qualifying for triple support.
Under the new regulations, children under 4 years old can receive up to $1,000 in credits annually, while children aged 4 to 16 can receive up to $500 in credits, significantly higher than the previous cap of $330 per child. This policy will be phased in over two years, beginning in 2026 for children under 4, and extending to older children in 2027.
In the 2024 fiscal year budget, Hochu initiated a three-year plan to raise the minimum wage, linking future increases to the inflation index. Effective January 1, 2026, the minimum wage in New York City, Westchester County, and Long Island increased to $17 per hour, while other regions in the state saw an increase to $16 per hour.
Starting in 2027, the minimum wage will be adjusted annually based on the Consumer Price Index for Urban Wage Earners and Clerical Workers in the Northeastern region, serving as a reflection of inflation.
Hochu emphasized that in the face of rising food, insurance, utilities, and general living costs in recent years, the state government will continue to implement tax cuts, subsidies, and wage growth policies to help residents alleviate economic pressures.