Albany, New York — New York Gov. Kathy Hochul announced Thursday that she will include a “no tax on tips” proposal in her fiscal year 2027 executive budget, moving to exempt a portion of tipped income from state taxes as she prepares for a reelection bid later this year.
Under the proposal, up to $25,000 in tipped income would be exempt from New York state income taxes for the 2026 tax year. Hochul’s office framed the plan as part of a broader affordability agenda, noting that her administration has enacted more than $9 billion in tax relief measures since she took office.
“I’m kicking the new year off with a proposal of no state income tax on tips, continuing my efforts to make New York more affordable for hard working New Yorkers,” Hochul said in a statement.
The move mirrors a policy championed nationally by President Donald Trump during the 2024 campaign, particularly in service-industry-heavy states such as Nevada. The concept later drew bipartisan traction, with then–Vice President Kamala Harris also backing a version of the proposal. Republicans ultimately included a federal “no tax on tips” provision in a major GOP policy bill last year, allowing deductions of up to $25,000 for tipped workers below certain income thresholds.
Hochul had previously faced criticism from the White House and Republicans for not implementing a state-level version sooner. Her announcement now places the policy squarely in the center of New York’s 2026 budget debate, where lawmakers will weigh its fiscal impact against broader revenue and equity considerations.
Hochul is seeking a second term in November and currently holds a substantial polling lead over Republican challenger Bruce Blakeman.
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