BILL NUMBER: S3386
SPONSOR: GOUNARDES
 
TITLE OF BILL:
An act to amend the tax law, in relation to itemized deductions for
charitable contributions
 
PURPOSE OR GENERAL IDEA OF BILL:
To repeal the state personal income tax deduction for charitable
contributions for filers making over $10 million
 
SUMMARY OF PROVISIONS:
Section one of this bill amends paragraph 2 of subsection (g) of
Section 615 of Tax Law to repeal the state match of the federal
deduction for charitable contributions, provided in Section 170 of the
Internal Revenue Code (IRC), for filers making over $10 million.
Section two sets the effective date.
 
JUSTIFICATION:
The federal government allows taxpayers to make a sizable deduction of
their personal income tax (PIT) liability when they donate to 501(c)(3)
public charities under 26 U.S. Code § 170. Taxpayers who choose to item-
ize their deductions can lower their adjusted gross income by up to 60%
by donating to organizations that operate for religious, charitable,
scientific, literary, or educational purposes or the prevention of
cruelty to animals or children. They can also deduct the fair market
value of any donated goods, such as clothing or household items, and 20
- 50% of their AGI for other non-cash contributions like appreciated
real property.
New York provides a state-level match of this generous federal deduction
under Tax Law Section § 615(g), but not for every income level. PIT
filers making more than $1 million can only claim 50% of the federal
deduction on their state returns, for example, while filers making more
than $10 million are limited to a 25% match. For every other type of
itemized deduction at these high income levels, the state provides no
match at all.
The FY25 Executive Budget recently proposed a permanent extension of the
25% cap of the federal deduction, which otherwise would have expired in
2025, concluding that allowing the cap to sunset would have cost the
state $350 million. This existing 25% cap on the federal match also
underscores the reality that PIT filers at such a high income threshold
do not need much assistance from the state to incentivize their contin-
ued giving.
This bill goes one step further to repeal the match of the federal
deduction entirely for PIT filers making more than $10 million, yielding
an additional $329 million to the state that can then be used for
healthcare, education, climate investments, or other poverty-fighting
tax expenditures which are targeted at low- and middle-income filers
rather than the very wealthy. While charitable giving is always lauda-
ble, the existing, incredibly generous federal deduction means that this
subset of filers will continue to dedicate some portion of their income
towards nonprofits. Furthermore, the fact that the federal deduction can
only be claimed when a taxpayer chooses to itemize their deductions,
rather than claiming the standard deduction, means that it benefits a
mere ten percent of filers.
This bill represents common sense fiscal policy, repealing an unneces-
sary tax break for very wealthy filers while yielding nearly $330
million back to the state's general fund which can be better used to
support the more than ninety percent of PIT filers who do not itemize
their deductions.
 
PRIOR LEGISLATIVE HISTORY:
2024: S9524 - Referred to Budget and Revenue
 
FISCAL IMPLICATIONS:
$329 million positive fiscal impact
 
EFFECTIVE DATE:
This act shall take effect immediately and apply to taxable years begin-
ning on or after the effective date.

Statutes affected:
S3386: 615 tax law, 615(g) tax law