With the start of the new tax year on January 1, 2026, Governor Kathy Hochul has announced several measures aimed at increasing affordability for New Yorkers. The Governor stated that her upcoming FY2027 Executive Budget proposal will include legislation to eliminate state income taxes on up to $25,000 of tipped income for tax year 2026, aligning with federal guidance. This initiative is part of a broader effort by the Governor’s administration to provide financial relief.
“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.”
Over recent years, rising costs for basic needs such as groceries and utilities have impacted many residents. In response, Governor Hochul’s Affordability Agenda has delivered over $9 billion in tax relief since she took office.
The FY 2026 Enacted Budget includes a middle class tax cut that is expected to deliver nearly $1 billion in relief to more than 8.3 million taxpayers earning up to $323,000 jointly. When fully implemented, this measure is projected to benefit about three-quarters of all filers.
Additionally, an expansion of New York’s child tax credit was included in the FY2026 Enacted Budget. The revised program now provides up to $1,000 annually per child under four years old and up to $500 per child aged four through sixteen. This marks a significant increase from previous amounts and extends benefits gradually over two years.
The minimum wage also increased beginning January 1, 2026: it rose to $17 per hour in New York City, Westchester County, and Long Island; elsewhere in the state it increased to $16 per hour. From 2027 onward these rates will adjust each year based on regional inflation data.
These initiatives build upon earlier elements of Governor Hochul’s Affordability Agenda such as an Inflation Refund program providing payments of up to $400 and universal free school meals intended to help families manage living expenses.
