New Yorkers will no longer have to pay taxes on tips in a new law that’s set to pass as part of a budget deal between Gov. Kathy Hochul and lawmakers.
Hochul had pushed exempting up to $25,000 in gratuity after backlash — and a Post front-page story — and she said Thursday it was part of a handshake budget deal, although the status of that agreement was called into question hours later.
“We got it done, and I said we’d put even more money back in your pockets with relief for utility ratepayers, and by ending state income taxes on tips so that servers working the double shift can keep more of what they earn,” Hochul said during a press briefing in the Red Room of the Albany Capitol building.
Governor Kathy Hochul announced the legislature as going to remove taxes on tips. Mike Groll/Office of Governor Kathy Hochul“We got it done. Over the next few days, the legislature will be conferencing and voting on the budget bills.”
Hochul faced heat late last year to include the tax break to match Trump’s vow to eliminate the levy on the federal level. She finally caved to pressure in January and in a turnaround announcement said she’d propose the exemption, which would likely go into effect for tips earned during 2026.
New York and other Blue States had faced criticism for not axing the tip tax on the state level to match up with the federal exemption. Empire State restaurant workers and bartenders also urged her to adopt the Trump policy on the state level.
Trump has been touting his signature no tax on tips policy around the country. AFP via Getty ImagesThe Business Council of New York State praised the tax as it moved closer to reality.
“Lower taxes should benefit not only businesses, but also the hardworking individuals who contribute to their local economies,” spokesperson Patrick Bailey said in a statement. “The Business Council supports eliminating taxes on tips, recognizing that working New Yorkers across the state are facing rising costs and struggling with affordability challenges.”
Although the tip exemption is likely still intact, Hochul and fellow Democrats who lead the legislature continue to stumble toward a final agreement. Hochul finally announced a budget deal Thursday, only for Assembly Speaker Carl Heastie to push back and say no agreement was in place.
The original budget deadline was April 1.
