ALBANY – A new tax cut plan included in the New York State Senate’s one-house budget proposal seeks to give $3.5 billion in tax breaks for the middle class, which state legislators say would be a boon to taxpayers in counties like Chenango.
The proposal additionally includes tax cuts of more than $494 million for small businesses, and another $275 million for seniors.
The highlight of the plan, unveiled by the State Senate Republican Majority last week, is the Middle Class Income Tax Relief Program which proponents argue will bring the middle class tax rate to its lowest point in 70 years.
Existing middle class tax cuts are currently set to expire in 2018 which will increase the tax rate to 6.85 percent. The Republican Senate’s proposal not only eliminates this increase, but it also phases in a 25 percent tax rate reduction to 5.14 percent. When fully effective by 2025, lawmakers say this could save taxpayers an average $897 per year for a total of $3.5 billion annually by 2025.
As for the proposal to ease the tax burden on small businesses and small farms, lawmakers aim to expand eligibility for tax credits while lifting restrictions on any business that files under a Personal Income Tax. The plan raises the income eligibility threshold from $250,000 to $500,000 when the business entity income is less than $1.5 million. It also eliminates the employee requirement; increases the exemption from 5 percent to 15 percent for small business income and from 5 percent to 20 percent for farm income; increases the corporate tax threshold from $390,000 to $500,000; and reduces the corporate business income rate for small businesses from 6.5 percent to 2.5 percent over two years.
Overall, the proposal gives a much needed break to workers and businesses owners throughout the Southern Tier, said Republican Senator Fred Akshar (52nd Senate District).
“Throughout my travels across the 52nd Senate District, listening to the people I represent, the reoccurring theme has been quite simple: cut oppressive taxes and improve the negative business climate in Upstate New York,” Akshar stated. “The very first pieces of legislation I introduced included these cut taxes for small businesses and I’m proud to partner with my colleagues to put forth a unified, aggressive but much needed tax cut plan to help the hardworking folks and business owners I represent and those across our state.”
The Senate’s budget proposal additionally includes income tax relief to help seniors who choose to stay in New York after retirement. The proposal increases the pension or retirement income exemption from $20,000 to $27,000 in 2017; to $34,000 in 2018; and to $40,000 in 2019. This would give senior taxpayers a savings of roughly $361 annually in the first year alone.
Furthermore, the plan seeks to completely eliminate the 18-a utility tax surcharge (saving taxpayers $125 million per year), and expedite tax reform introduced in 2014 that encourages business and farm owners to pass down their operation from one generation to the next.