Overview
- The plan would cover tips earned in the 2026 tax year and is intended to align with new federal guidance on tip deductions.
- Gov. Kathy Hochul framed the measure as part of an affordability agenda that also includes a higher minimum wage, expanded child tax credits, and a middle-class tax cut.
- Senate Democrats said they will evaluate the proposal, while a Republican bill to exempt tips last year did not make it out of committee.
- Federal law allows eligible workers to deduct tip income up to a cap through 2028, with phase-outs at higher incomes and no benefit for those with no federal tax liability.
- Hospitality leaders said the change could aid hiring and retention, as critics argued Hochul shifted course under pressure from tipped workers and political opponents.