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Department of Taxation and Finance

Response to the federal Tax Cuts and Jobs Act

The passage of the federal Tax Cuts and Jobs Act (TCJA) will have a significant impact on the economy and tax system of New York State. New York State has taken several actions in response to the passage of the federal bill, which are outlined below.

New York State Charitable Gifts Trust Fund

The FY 2019 Budget creates a new Charitable Gifts Trust Fund in the joint custody of the New York State Commissioner of Taxation and Finance and the State Comptroller to accept donations for the purposes of improving health care and public education in New York State. Starting in 2018, donating taxpayers may claim a deduction on their New York State income tax returns equaling the full donation amount of any contribution for the tax year in which the donation is made. Donating taxpayers may also claim a New York State income tax credit equal to 85% of the donation amount for the tax year after the donation is made. For example, a taxpayer who makes a $1,000 contribution in calendar year 2018 will be entitled to a $1,000 deduction on her 2018 New York State income taxes (due in April 2019) and an $850 New York State income tax credit (85% of $1,000) on her 2019 New York State income taxes (due in April 2020).

Contributors to the Charitable Gifts Trust Fund may choose to direct their donations into one of two accounts. The Health Charitable Account will receive charitable contributions for services relating to primary, preventive, and inpatient health care, dental and vision care, hunger prevention and nutritional assistance, and other services for New York State residents with the overall goal of ensuring that residents have access to quality health care and other related services. The Elementary and Secondary Education Account will receive charitable contributions to support the elementary and secondary education of students enrolled in public school districts in the New York State.

New Yorkers interested in making a contribution to one of these accounts can mail a check to:

NEW YORK STATE TREASURER
DIVISION OF THE TREASURY
P.O. BOX 22119
ALBANY NY  12201-2119

The check should be made out to the State Treasurer; the memo line should specify Health Charitable Account or Elementary and Secondary Education Account.

As always, taxpayers are advised to consult a qualified tax advisor regarding their personal situation.

In January, the Tax Department released a preliminary report to the Governor to outline options for New York State tax reform in response to the TCJA.  The report is divided into four sections.

  • Part I outlines a proposal to increase charitable giving in New York State;
  • Part II discusses various options for reducing the New York State’s reliance on the personal income tax and adopting an employer compensation expense tax, including the possibility of a voluntary employer opt-in system;
  • Part III outlines options for consideration of an unincorporated business tax; and
  • Part IV discusses the impacts of the TCJA on New York State’s tax system and potential responses.

The Division of the Budget released a summary of certain actions contained in the Enacted Budget (Chapter 59 of 2018). The FY 2019 Budget:

  • creates a new state-operated Charitable Gifts Trust Fund to accept donations for the purposes of improving health care and public education in New York State;
  • authorizes local governments to establish charitable gift reserve funds and to offer real property tax credits to incentivize contributions; and
  • allows employers to opt-in to a new Employer Compensation Expense Program (ECEP).

Following up on the options outlined in Part III of the preliminary report, the Tax Department has released a discussion draft of legislation imposing an unincorporated business tax (UBT), including a summary document highlighting key provisions of the draft.

This discussion draft puts forward a statewide UBT for public consideration and comment. The draft would apply a new business tax on partnerships doing business in New York State, while creating a corresponding tax credit for individual and corporate partners of those partnerships.

The purpose of this discussion draft is to allow interested parties the opportunity to provide feedback on both the general concept of a statewide UBT and the specific details involved in the design and implementation of such a tax. To that end, the discussion draft is annotated to note areas for potential comment.

The Tax Department welcomes your input on the draft, and respectfully asks for responses by July 16, 2018.  Please send comments to federal.tax.response.comments@tax.ny.gov

UBT discussion resources

Updated: