With the start of the new tax year on January 1, 2026, New York Governor Kathy Hochul has announced several measures aimed at increasing affordability for residents. These initiatives include new tax relief efforts, an expansion of the child tax credit, and higher minimum wages across the state.
Governor Hochul stated: “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. 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.”
A key part of her plan is proposed legislation that would eliminate state income taxes on up to $25,000 of tipped income starting in tax year 2026. This proposal aligns with federal guidelines and is intended to support workers who rely on tips as a significant portion of their earnings.
Over recent years, essential costs such as groceries and utilities have risen sharply. In response, Governor Hochul launched her Affordability Agenda, which she says has provided over $9 billion in tax relief to individuals and families since she took office.
The enacted FY 2026 budget includes a middle class tax cut expected to provide nearly $1 billion in relief to more than 8.3 million taxpayers earning up to $323,000 for joint filers. When fully implemented, this measure is projected to benefit about three out of every four taxpayers.
Additionally, changes to New York’s child tax credit will offer increased support for families statewide. The expansion raises benefits up to $1,000 per year for each child under four years old and up to $500 per child aged four through sixteen. The previous maximum was $330 per child. These changes are set to be phased in over two years beginning in 2026.
Minimum wage increases are also part of these affordability efforts. As of January 1, 2026, minimum wage rose to $17 per hour in New York City as well as Westchester and Long Island; elsewhere it is now $16 per hour. Starting in 2027, annual adjustments will be tied to inflation rates measured by the Consumer Price Index for Urban Wage Earned and Clerical Workers (CPI-W) specific to the Northeast Region.
Other elements highlighted from Governor Hochul’s agenda include an Inflation Refund program that provided direct payments—up to $400—to eligible residents and universal free school meals designed to save families additional expenses annually.
