The state of New York is bracing for substantial tax and legislative changes that could reshape the economic landscape. From the expiration of federal tax reforms to new state mandates, these shifts could significantly impact businesses and residents in the tri-state area. Here’s what you need to know about the changes on the horizon.
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Tax Cuts
One of the biggest changes looming is the expiration of the Tax Cuts and Jobs Act (TCJA), a landmark tax reform implemented in 2018. Unless Congress extends or modifies the Act, it will expire at the end of this year, bringing sweeping changes for taxpayers.
Provisions at Stake
The TCJA lowered individual and corporate tax rates, increased the standard deduction and child tax credit, and raised estate tax exemptions. However, it also imposed a $10,000 cap on the federal deduction for state and local taxes (SALT). This cap has significantly affected taxpayers in high-tax states like New York.
Jim Schnell, a tax partner at MMB + Co LLP, noted, “The SALT cap was a substantial change for many middle- and upper-class tax filers, especially in states with high property and income taxes.”
Potential Outcomes
The future of the SALT cap and other TCJA provisions will depend on Congress. If the cap is removed, it could primarily benefit high-income earners, as highlighted by the Tax Policy Center. On the other hand, extending the cap would continue to impact middle-class families.
Legislative Changes
While the fate of the TCJA is uncertain, several new state-level legislative changes are already in motion for 2025, directly affecting residents and businesses in the tri-state region.
Paid Time Off
Starting January 1, 2025, New York employers must provide at least 20 hours of paid time off for pregnant employees to attend medical appointments, including sonograms.
Expanded Sick Leave
Connecticut has expanded its sick leave policy. Nearly all private-sector employers with 25 or more employees will be required to offer 40 hours of sick leave, down from the previous threshold of 50 employees.
Gas Tax Hike
In New Jersey, drivers will face a 2.6-cent increase per gallon in the state’s gas tax, bringing the total tax to approximately 45 cents per gallon.
Benefits
In addition to tax changes, New York workers and families will see enhanced benefits starting in 2025. Governor Kathy Hochul recently announced increases in workers’ compensation and Paid Family Leave benefits.
Updates
- Minimum and Maximum Weekly Benefits: Workers’ compensation and Paid Family Leave weekly benefit amounts will rise.
- Employer Savings: The workers’ compensation assessment rate for employers will decrease, providing financial relief for businesses.
Governor Hochul emphasized the importance of supporting both workers and businesses, stating, “Hardworking New Yorkers shouldn’t have to worry about paying rent or buying food when they need time off to care for a family member or recover from an injury. Likewise, businesses need affordable solutions to thrive.”
These changes aim to strike a balance between supporting workers and easing the financial burden on employers.
New York’s evolving tax and labor landscape will require careful planning from businesses and individuals. Staying informed and proactive will be crucial to navigating these shifts successfully.
FAQs
What is the SALT cap under the Tax Cuts and Jobs Act?
The SALT cap limits federal deductions for state and local taxes to $10,000.
When will the Tax Cuts and Jobs Act expire?
The TCJA is set to expire at the end of this year unless extended.
What new benefit is available for pregnant employees in New York?
Employers must provide 20 hours of paid time off for medical appointments.
How much is New Jersey’s gas tax increasing?
The gas tax will increase by 2.6 cents per gallon in 2025.
What changes are coming to Paid Family Leave in New York?
The maximum weekly benefit will increase, while employer assessment rates decrease.
