New York State Tax Updates

Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for New York.

February 3, 2026

New York Plans to Decouple From Federal Business Tax Breaks

Authored by: Jessie Racioppi and Katie Nguyen, CPA

New York lawmakers are working on legislation to separate from the business tax breaks under the federal tax bill signed in July 2025. State budget officials estimate decoupling from the business tax breaks would save the state $1.4 billion. Governor Kathy Hochul’s proposed $260 billion budget would prevent New York from conforming to new federal deductions that allow qualified taxpayers to immediately expense qualified research expenses and/or the full cost of equipment or property in the year of purchase. Instead, taxpayers would continue to capitalize these costs and depreciate them over multiple years, consistent with prior federal rules. New York is a rolling conformity state, meaning the State automatically adopts the federal tax code unless decoupling legislation is passed.

If you have questions about a state’s conformity with the IRC, please reach out to a member of the Withum SALT Team.

October 20, 2025

New York Employer Compensation Expense Program Sets Election Deadline for December 1, 2025

Authored by: Courtney Easterday, MSA and Brian Meier, MSA

New York employers have until December 1, 2025, to opt into the Employer Compensation Expense Program (ECEP) for the upcoming tax year. This voluntary program allows businesses to pay a 5% tax on wages exceeding $40,000 per employee, helping mitigate the impact of federal limits on state and local tax deductions. Enrollment is done through the state’s Business Online Services portal, and once elected, participation requires quarterly tax payments aligned with withholding schedules, though filings must be submitted separately.

Employees working for participating employers may be eligible for a nonrefundable wage credit on their state income tax returns, potentially offsetting the effects of the ECET. Employers are encouraged to inform affected staff and review withholding forms to ensure proper tax planning. If an employer wishes to revoke their election, they must do so by January 15 of the tax year, provided no payments or filings have been made.

If you believe your business may qualify, please reach out to the Withum SALT Team for assistance with electing.

September 29, 2025

Statewide Refund Program Provides Relief for NY Families

Authored by: Courtney Easterday, MSA and Emilia Jarrin

As part of a statewide initiative to ease financial pressures, New York has begun issuing inflation relief payments to approximately 8 million households. The program provides direct payments of up to $400 to help offset the rising cost of living and increased sales tax burdens experienced over the past year. Eligible residents are not required to apply for the benefit, as the state is automatically mailing the checks. To be eligible, a 2023 resident return with New York AGI below the specified thresholds must have been filed. The AGI threshold is generally $150,000 for MFS/Single and $200,000 for married taxpayers filing jointly. Distribution will continue over the next two months.

If you have questions about state personal income taxes, please reach out to a member of the Withum SALT Team.

August 6, 2025

New York Bill Proposes Additional City Taxes on Incomes Over $1 Million

Authored by: Bonnie Susmano, JD, MBA and Eric Wagener

On July 16, 2025, Assembly Bill 8953, titled the “Fair Share Tax Act”, was proposed to authorize and empower any city to adopt and amend local laws to impose an additional 2% tax on the annual city taxable income of every city resident, estate and trust reporting a return of more than $1 million.

Other states have adopted or proposed similar measures on high-earning individuals, though not at the city level. For example, Illinois also proposed an additional 3 percent tax on individual income exceeding $1 million. Massachusetts enacted a statewide 4 percent tax on individuals in 2023 whose income exceeds $1 million, which is adjusted annually for inflation.

If you have questions on state and local taxes on individual income, please reach out to a member of the Withum SALT Team.

June 3, 2025

New York Appeals Court Upholds Taxability of Document Management Services

Authored by: Breea Boylan, MSA, CPA and Penny Sweeting, CPA

New York Administrative Law Judge (“ALJ”) Winifred M. Maloney upheld the Division of Taxation’s determination in the matter of the petition of NetVoyage Corp., also known as NetDocuments.com. The Division of Taxation determined that the taxpayer’s document and workflow software is subject to sales and use tax under New York law. The taxpayer provides cloud-based document management services to legal, financial and accounting service industries and contended that their services were not taxable.

In New York, software, regardless of how transmitted to the customer, is considered tangible property and is subject to sales and use tax. The ALJ determined that software was the central element of the taxpayer’s product and that certain features on the platform made it more than data storage. In addition to the determination that the services were considered taxable software, the taxpayer bundled other services into a single service fee, which was found to be subject to tax.

If you have questions about New York taxes, please reach out to a member of the Withum SALT Team.

June 3, 2025

New York Digital Game Tax Credit Program 2025 Update

Authored by: Breea Boylan, MSA, CPA and Penny Sweeting, CPA

New York Governor Hochul signed the FY2026 State Budget into law, providing a significant win for the digital game industry. Applications for the original tax credit began in 2023, and this current budget includes key enhancements to the credit program.

Lower production cost threshold: $50K (down from $100K)
Higher salary cap for eligible wages: $200K (up from $100K)
Reduced in-state spending requirement: 51% (down from 75%)
Increased cap on qualified costs: $5M (up from $4M)

Qualified digital game development studios can receive up to 35% tax credits on qualified production costs in the state. The enhancements are designed to attract new production and support long-term growth in the New York State sector.

If you have questions about the Digital Game Tax Credit Program, application process or New York taxes, please reach out to a member of the Withum SALT Team.

April 29, 2025

New York Court of Appeals Upholds Taxable Information Service Ruling

Authored by: Katie Nguyen, CPA and Brandon Spinella

On April 17, 2025, the New York Court of Appeals upheld the Tax Appeals Tribunal’s determination that a taxpayer’s service measuring digital effectiveness is a taxable information service, which will impact the advertising information services industry. The reports created from the service contain data analysis, survey data, and client-specific insights and recommended steps. Taxpayers may still receive tax-exempt advertising consulting services that assess how many potential customers are viewing and clicking their ads; however, comparing their analytics to those of competitors will no longer be taxable. The exemption to the normal tax on the sale or use of services applies to information services that provide individualized data or other information that is not “substantially incorporated” in reports given to other clients.

If you have questions about the taxation of digital services, please reach out to a member of the Withum SALT Team.

February 18, 2025

NYC Mayor Proposes New Tax Credit and Incentive Opportunity

Authored by: Bonnie Susmano, JD, MBA and Kiana McGowan, CPA, MBA

On February 3, 2025, Mayor Eric Adams proposed the “Relocation Assistance Credit for Employees” (RACE) program, designed to encourage out-of-state companies to relocate to New York City. This tax incentive aims to attract 15 new large tenants by the end of 2025, thereby engaging over 800,000 square feet of office space and creating 3,000 new jobs. To qualify, companies must sign leases for a minimum of 20,000 square feet in eligible office buildings and use the office space for manufacturing activities. Nonprofit entities, retail businesses, and hotel services are excluded from this incentive. The specific size and details of the tax credit have not yet been disclosed. The RACE program still needs approval from the state Legislature. Mayor Adams has until the end of the state’s legislative session on June 12, 2025, to secure approval for the proposed program. Note that the existing Relocation and Employment Assistance Program (REAP) will be extended for five years, providing tax credits for relocating jobs to designated areas within NYC.

If you have questions about State Credits and Incentives, please reach out to a member of the Withum SALT Team.

January 30, 2025

New York Governor Hochul Proposes Tax Cuts

Authored by: Jessie Racioppi and Penny Sweeting, CPA

On January 14, 2025, New York Governor Kathy Hochul announced proposed tax cuts. The proposal includes tax cuts that will result in tax savings for joint filers with income up to $323,000. The tax cut will result in $1 billion in cumulative tax savings for more than 8.3 million New York taxpayers. The proposal also expands the State’s child tax credit to $1,000 for children under the age of four and $500 for children ages four through sixteen.

For more information, please visit the Governor’s proposed budget summary.

If you have questions about how state budgets affect your state tax liability, please reach out to a member Withum SALT Team.

January 30, 2025

New York State Regulates Short-Term Rental Units

Authored by: Bonnie Susmano, JD, MBA and Breea Boylan, CPA

Effective March 25, 2025, the new Short-Term Rental Registry law goes into effect in New York State, which requires short-term rentals, 30 consecutive days or less to pay sales tax and local occupancy tax for the first time and gives counties information about the local landscape (e.g., Airbnb and VRBO). Through a mandatory registration requirement, state and local municipalities will have significantly more information about the rental market and generate significant potential revenue. The bad news is that taxpayers looking to make a little extra income will have additional filing and reporting requirements. The Short-Term Rental Registry is a significant change in the law and the first of its kind in the nation. Whether AirBnB and/or VRBO will challenge the new law is unclear. We will keep you updated on any new developments.

If you have questions about New York taxes, please reach out to a member of the Withum SALT Team.

November 25, 2024

New York Appellate Division Overturns Tax Warrant Due to Procedural Errors

Authored by: Bonnie Susmano, JD, MBA and Kiana McGowan, CPA, MBA

On November 7, 2024, the New York Appellate Division, Third Department, issued a ruling in the case of Julianne Beckerman versus the New York State Department of Taxation and Finance. Beckerman had challenged a tax warrant that was issued against her, asserting that she deserved a prepayment hearing. She argued that the notice and demand for payment were incorrect, as she had not been convicted in the associated criminal case. The court found that the Department had wrongly issued the notice and demand, which were based on her alleged joint liability with her husband, who had admitted to owing the tax. The court concluded that a notice of deficiency should have been issued first, which would have given Beckerman the chance for a prepayment hearing. As a result, the court annulled both the notice and demand and the tax warrant.

If you have questions about state tax collection and enforcement, please reach out to a member of the Withum SALT Team.

October 16, 2024

New York Court of Appeals to Review Tax Tribunal’s Ruling on Ad Research Company’s Tax Liability

Authored by: Bonnie Susmano, JD, MBA and Brandon Spinella

The New York Court of Appeals recently announced that it would review the Tax Appeals Tribunal’s ruling in the Matter of Dynamic Logic, Inc. v. Tax Appeals Trib. Of State of New York, N.Y., Motion No. 2024-284, granting review 6/20/24. The Tribunal held an advertising research company is liable for sales and use tax for information services it provides to clients. The petitioner is a company that uses its research tool, AdIndex, to measure the effectiveness of clients’ advertising campaigns using surveys of those who did and did not view the ad campaign. The survey data is provided to clients along with a report that analyzes the results by comparing a client’s advertising campaign with industry-specific benchmarking norms linked to a database, MarketNorms, which aggregates results from AdIndex. Since the taxpayer provides advice and recommendations based on the data it compiles, the N.Y. Court of Appeals found the service constituted a taxable information service, and thus, the Court held the taxpayer was liable for sales and use tax under New York Tax Law Section 1105 (c) (1). Additionally, the Court rejected the taxpayer’s other argument that if it were selling an information service, it would be nontaxable because the information is personal and individual in nature and cannot be incorporated into reports of others because the data and information come from surveys analyzed by the petitioner’s research analysts and provided to clients in a report.

If you have questions about whether transactions are subject to sales tax, please reach out to a member of the Withum SALT Team.

Disclaimer: Please note that this information is readily available at this time and is subject to change, so please consult your Withum tax advisor.