Governor Kathy Hochul says her upcoming state budget proposal will include legislation to eliminate state taxes on a portion of tipped income.
Hochul announced Thursday that she plans to include a measure in her 2026–2027 spending plan that would exempt up to $25,000 in tipped income from state taxes for the 2026 tax year.
The proposal would mirror a provision included in President Donald Trump’s “Big Beautiful Bill” at the federal level and is being pitched by the governor as part of her broader effort to provide financial relief to New Yorkers. Hochul said the measure is intended to put more money back into the pockets of workers who rely heavily on tips, particularly in the hospitality and service industries.
“As we welcome in the New Year, affordability remains my top priority and I am doubling down on my commitment to put money back in New Yorkers’ pockets,” Governor Hochul said. “Starting today, tax rates for the vast majority of lower and middle-class New Yorkers will be cut, families with children will see a sweeping increase in the child tax credit, and minimum wage workers across the state will see their wages go up. I’m kicking the new year off with a proposal of no state income tax on tips, continuing my efforts to make New York more affordable for hard working New Yorkers.”
The proposal will be considered as part of the state budget negotiations in the months ahead.
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