On April 30^th a New York State Budget deal was announced that includes several important changes impacting residents. Not only does the FY2026 budget deal mean there will be Inflation Refund Checks issued to taxpayers, but it also includes an expansion of the state’s Child Tax Credit, reduction of the Payroll Mobility Tax for small businesses, and a tax cut for the middle class. These changes are designed to help New Yorkers deal with the state’s high cost of living and the rising prices due to inflation. While the budget has not yet been formally passed it is expected the legislature will do so in the coming days. The announcement is welcome news for individuals, families and businesses.  To help clients, prospects, and others, Dermody, Burke & Brown, CPAs, has provided a summary of the key details below. 

Highlights of the FY2026 Budget

• Inflation Refund Checks – These one-time refund checks are available to those who filed a tax return in 2023 depending on income reported. Joint filers with an adjusted gross income (AGI) up to $150,000 receive a $400 check and joint filers with an AGI over $150,000 but less than $300,000 will receive a $300 check. Individual tax adjusted gross income Individuals with an AGI up to $75,000 will receive $200 and those with an AGI greater than $70,000 but not more than $150,000 will receive $150. Unfortunately, those that were claimed as dependents or reported more in income are not eligible. 

• Empire State Child Tax Credit – There is also an increase and expansion of the Empire State Tax  Credit which includes an annual tax credit of up to $1,000 per child under age four. The credit reduces to $500 per child for those aged four through sixteen. In addition, eligibility rules have been updated to allow low-income families previously ineligible to benefit. These changes will be phased in over a two-year period with the $1,000 credit available in 2025, and the $500 credit available in 2026. Additional details about the expansion are forthcoming. 

• Tax Cut for the Middle Class – There is also a plan to cut taxes for 75% of all state filers. The reduction will impact taxpayers filing jointly making less than $323,000 in AGI. It appears the reduction will be phased in over several years and is expected to reduce taxes to the lowest rate in 70 years. Additional details about the tax reduction are forthcoming. 

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The tax relief announcement is certainly welcome news for New Yorkers facing economic uncertainty and high inflation. The changes will provide much needed relief for individuals, families, and businesses. If you have questions about the information outlined above or need assistance with another tax or accounting issue, Dermody, Burke & Brown, CPAs, can help. For additional information call 315-471-9171 or click here to contact us. We look forward to speaking with you soon.