New York City Mayor Zohran Mamdani wants to cut a tax benefit used by some New York City business owners to help close the city\u2019s $5.4 billion budget gap.<\/p>\n
Mamdani released an executive budget plan Tuesday that would reduce a personal income tax credit for filers making more than $142,000 who are subject to the city\u2019s unincorporated business tax. The change would generate $68 million annually, city officials said.<\/p>\n
New York City officials can adjust property tax rates, but must otherwise receive state approval to change or implement other city taxes. Gov. Kathy Hochul said Tuesday she struck a deal with Mamdani to send $4 billion in aid to the city, though it wasn\u2019t immediately clear if that figure included the proposed credit adjustment.<\/p>\n
Mamdani\u2019s plan would raise a fraction of the $700 million that he and City Council Speaker Julie Menin (D) targeted in April when they called on state officials to shrink the pass-through entity tax credit<\/a> used by law firms, hedge funds, and other businesses. Hochul said she opposed any changes to the PTET.<\/p>\n Business owners currently can receive a personal income tax credit that\u2019s at least 23% of what they paid in unincorporated business taxes, depending on their income level. Mamdani\u2019s budget would gradually reduce the credit for filers making $142,000 or more, with it bottoming out at 15% for those earning $1 million and more. <\/p>\n Mamdani\u2019s budget also includes $500 million the state estimates it will raise from instituting a tax on second homes worth more than $5 million. Details of the pied-\u00e0-terre levy are still being hammered out<\/a> by state and city officials, who are struggling with how to structure the tax due to the city\u2019s complex property tax code. <\/p>\n The city budget estimates a roughly $60 million annual loss from allowing taxpayers to deduct up to $25,000 in tipped income, which was approved under the 2025 federal tax law signed by President Donald Trump. Hochul\u2019s budget would preserve the deduction in the state and city tax code.<\/p>\n The state\u2019s fiscal 2027 budget plan is still incomplete almost six weeks past the April 1 deadline, though Hochul said May 7 she reached a tentative deal with lawmakers to include the second-home tax in it.<\/p>\n