The new ‘No Tax on Tips’ law has just arrived in New York; here’s what it means for these workers. With the passing of the ‘One Big Beautiful Bill’ Act in July of this year, this has meant a host of new changes have been implemented for a variety of different individuals and industries, including hospitality workers and employers. Subsequent legislation following the One Big Beautiful Bill sees new tax and financial obligations and reductions go into place for these individuals.
New York sees new payment initiatives across the board
New York State residents have seen a host of new payment and financial initiatives take place recently, with the majority pertaining to social service programs and initiatives. Two new payment initiatives that went into effect by Governor Kathy Hochul’s government this year included the following: expanding the Child Tax Credit, lowering taxes for eligible New York households, a $2.2 billion investment in childcare in the state, and the distribution of inflation rebate checks worth up to $400 for eligible beneficiaries
“I applaud Gov Hochul’s affordability proposals, which include cutting taxes for the middle class and expanding the size of the child tax credit,” said Assembly Majority Leader Crystal Peoples-Stokes in response to the recent initiaves. “We know that when people have more money in their pockets that money gets spent in their neighborhoods, further strengthening their communities. Thank you Gov Hochul for providing this support for families across the state, and especially here in Western New York.”
The expansion of the Child Tax Credit will see 118,000 Western New York families now eligible to receive up to $1,000 in tax credits per qualifying child. The updated tax cuts will see income taxes lowered for 507,000 New Yorkers, reaching new lows not seen in seventy years. In keeping with making New York more affordable for families, the state continues to invest in providing affordable child care for residents on top of introducing a one-time inflation rebate check to offset costs associated with rises in sales tax, thanks to inflation.
How the ‘No Tax on Tips’ law affects New York residents
On top of these new initiatives from local authorities, New York residents will also be subject to the effects of the implementation of the ‘No Tax on Tips’ law, which forms part of a new US federal tax package that aims to reduce the tax burden on workers across the country, specifically in the service and hospitality industry. The new ‘No Tax on Tips’ provisions allow for these workers to deduct up to $25,000 earned in tips from their taxable income for tax years January 2025 through January 2028.
Qualified professionals from the following sectors may receive the deduction, including, but not limited to:
- Beverage and Food Service
- Entertainment and Events
- Hospitality And Guest Services
- Home Services
- Personal Services
- Personal Appearance and Wellness
- Recreation and Instruction
- Transportation and Delivery
Updated W-2 and 1099 forms, which reflect these new tax changes, will be distributed to employers from January of next year.
New tax rebates for these individuals
While New York service and hospitality workers can begin to prepare for these new tax obligations according to the No Tax on Tips Act in the U.S. Congress, among other workers in these sectors across the country, tax rebates specific to New York are currently being distributed by authorities for eligible beneficiaries.
The School Tax Relief Program (STAR) for homeowners is specific to eligible New York residents who qualify to receive a tax break on their property taxes. STAR is divided into two different programs, with senior homeowners eligible to receive a high tax rebate payment compared to working homeowners. In order to qualify for the program, you must meet specific income limits, as well as ensure that you have filed all the necessary tax obligation paperwork to see your refund distributed.
