New York lawmakers voted to raise taxes in the already high-tax state. It will now become the state with the highest taxes in the country. It’s a gamble after losing so many residents during the pandemic.
Residents who earn more than $1 million and couples who earn more than $2 million will now pay a state income tax of 9.65%, up from 8.82%. The corporate tax rate will go up to 7.25%, up from 6.5%. The state will also legalize sports betting in order to tax it.
The state estimates that these tax hikes could earn an additional $4 billion in revenue annually.
Recall that the tax changes made by former President Trump in 2017 included a limit on deducting state tax payments from federal tax payments. Residents can only deduct $10,000 per year of state taxes, and many New Yorkers will blow right past that limit. The Biden tax proposal has no plan to change that.
The tax hike will expire in 2027 but no one expects lawmakers to lower rates. New Jersey voted to hike tax rates last year and similar measures are being considered in Maryland, Massachusetts and California.