BILL NUMBER: S8720
SPONSOR: GOUNARDES
 
TITLE OF BILL:
An act to amend the tax law, in relation to making certain higher
personal income tax rates permanent; and to repeal certain provisions of
such law relating thereto
 
PURPOSE OR GENERAL IDEA OF BILL:
To permanently codify the state's highest personal income tax rates on
extremely wealthy filers which have been in effect since 2021
 
SUMMARY OF PROVISIONS:
Section one of this bill amends clause (viii) of subparagraph (B) of
paragraph 1 of subdivision (a) of Section 601 of the Tax Law, which sets
the tax rates for those who are married filing jointly and surviving
spouses. This amendment permanently codifies the top tax rate of 9.65%
for filers in this category making more than $2.1 million, 10.3% for
filers making more than $5 million, and 10.9% for filers making more
than $25 million.
Section two of this bill repeals clause (ix) of subparagraph (B) of
paragraph 1 of subdivision (a) of Section 601, which would have reverted
the tax table back to the top rate of 8.82% for all filers in this cate-
gory making more than $2.1 million in 2033.
Section three of this bill amends clause (viii) of subparagraph (B) of
paragraph 1 of subdivision (b) of Section 601 of the Tax Law, which sets
the tax rates for heads of household. This amendment permanently codi-
fies the top tax rate of 9.65% for filers in this category making more
than $1.6 million, 10.3% for filers making more than $5 million, and
10.9% for filers making more than $25 million.
Section four of this bill repeals clause (ix) of subparagraph (B) of
paragraph 1 of subdivision (b) of Section 601, which would have reverted
the tax table back to the top rate of 8.82% for all filers in this cate-
gory making more than $1.6 million in 2033.
Section five of this bill amends clause (viii) of subparagraph (B) of
paragraph 1 of subdivision (c ) of Section 601 of the Tax Law, which
sets the tax rates for those who are single or married filing separate-
ly. This amendment permanently codifies the top tax rates of 9.65% for
filers in this category making more than $1 million, 10.3% for filers
making more than $5 million, and 10.9% for filers making more than $25
million.
Section six of this bill repeals clause (ix) of subparagraph (B) of
paragraph 1 of subdivision (c ) of Section 601, which would have
reverted the tax table back to the top rate of 8.82% for all filers in
this category making more than $1 million in 2033.
Section seven of this bill sets the effective date.
 
JUSTIFICATION:
In April 2021, New York State first created its current tax rate for its
highest income filers in Part A of Ch. 59, the Revenue budget. Previ-
ously, taxpayers in the top bracket of more than $1.6 million had been
subject to a top rate of only 8.82%, which was far lower than the top
rate in many other states such as California, Hawaii, Massachusetts,
Minnesota, New Jersey, and Oregon. Understanding that the state would
not be able to fund basic social services such as education, Medicaid,
public transportation, and affordable housing absent billions more in
state spending, the Governor and the legislature agreed to raise taxes
on the wealthiest of filers in the 2021 enacted budget, creating a set
of higher graduated rates ranging from 9.65% for filers making more than
$1 million to 10.9% for filers making more than $25 million. While the
legislature has extended the top set of brackets since then, the fact
that they are slated to sunset in 2033 complicates the state's long-term
fiscal forecast while leaving open the possibility that a future execu-
tive or legislature could respond to shifting political winds by letting
the 10.9% rate lapse, lurching the state billions of dollars into debt.
This bill removes this hypothetical by permanently codifying the top
10.9% personal income tax rate. It maintains the status quo for the most
fortunate amongst us, who just received a massive tax break under the
2025 One Big Beautiful Bill Act, which will send over 1/3 of its net tax
reductions to those making more than $500,000 by calendar year 2027.1 By
asking filers making more than $1 million to continue remitting the same
taxes to the state in the future that they do today, this bill will
remove the possibility of a near-term fiscal cliff while allowing poli-
cymakers and advocates to focus on other revenue problems and solutions
instead.
 
PRIOR LEGISLATIVE HISTORY:
None
 
FISCAL IMPLICATIONS:
TBD
 
EFFECTIVE DATE:
This act shall take effect immediately.
1 DiNapoli, New York State Comptroller Tom. Tax Provisions under the
Federal Reconciliation Bill. New York State Comptroller, 2025.

Statutes affected:
S8720: 601 tax law