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Tax Department outlines Hochul tax package: $3 billion rebate, child-credit expansion and IT upgrades
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Summary
Acting Commissioner testified on Governor Hochul's executive budget tax proposals, including a $3 billion one‑time sales-tax rebate, phased middle‑income rate cuts, a major expansion of the Empire State Child Credit and ongoing Tax Department IT modernization and service initiatives.
Acting Commissioner, representing the New York State Department of Taxation and Finance, told the joint fiscal committees that Governor Kathy Hochul’s executive budget advances a three‑part tax relief plan and a slate of administrative modernizations. The plan includes a one‑time $3,000,000,000 sales‑tax rebate, phased cuts to low‑ and middle‑income personal income tax rates, and a significant expansion of the Empire State Child Credit.
The commissioner said the $3 billion rebate would be delivered to about 8,600,000 households this year. The proposed income‑tax changes would reduce rates for low‑ and middle‑income taxpayers and, when fully phased in, provide about $1,000,000,000 in recurring relief to about 8,300,000 New Yorkers. The budget would also extend the state’s top three tax brackets for five years to preserve predictability for higher‑income taxpayers, the commissioner said.
On child tax relief, the executive budget would increase the state child credit from $330 to $500 for children ages 4 to 16 and to $1,000 for children under age 4; it would also eliminate the minimum earned‑income requirement and change phase‑out rules so more families can qualify, the commissioner said. That expansion follows recommendations from the Child Poverty Reduction Advisory Council and is intended to help the state hit its goal of halving child poverty.
The department also described taxpayer‑service and systems changes. Direct File — the state’s parallel filing tool launched with the IRS pilot — was used by 14,000 New Yorkers in last year’s pilot, saving filers roughly $260–$270 each, the commissioner said. Eligibility and functionality for Direct File have been broadened for tax year 2025 (expanded income bands and additional credits supported), and the department reported thousands of filers used its mobile app this season, with 83% filing in under 15 minutes and a 97% satisfaction rate.
On core IT modernization, the commissioner said the department is in year four of a five‑year replatforming. A new wage‑and‑withholding system will be used this spring to process roughly 600,000 first‑quarter reports covering about 14,000,000 employee records; a Real Property System Online (RPSO) is scheduled to go live this summer to replace aging assessor software; and a Secure Choice state‑sponsored retirement program for employees without employer plans will begin limited employer onboarding in June and wider rollout in the fall.
The commissioner framed the proposals as a combination of near‑term relief and long‑term administrative investment: the rebate and rate cuts provide immediate household relief while Direct File and the IT upgrades aim to reduce compliance costs and modernize agency operations.
"I'm incredibly proud of Team Tax and the work we are doing at the Tax Department," the commissioner said, adding the department looks forward to working with the Legislature on the proposals.
The committee members asked follow‑up questions across several topics, including the fiscal cost of the child credit changes, operational readiness for Secure Choice onboarding, and how expanded Direct File eligibility will be implemented. The commissioner said the department will provide additional data on STAR participation, itemized deduction claimants, and breakdowns of million‑dollar filers on follow up requests.
