NY State Senate Bill 2025-S953

Senate Bill S953

2025-2026 Legislative Session

Raises the tax rate on corporate income; increases the state conformity to federal taxation of corporate profit shifting; and imposes an additional tax on individual business income

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Current Bill Status - In Senate Committee Budget And Revenue Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 08, 2025	referred to budget and revenue

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2025-S953 (ACTIVE) - Details

Current Committee:: Senate Budget And Revenue
Law Section:: Tax Law
Laws Affected:: Amd §§208, 210, 210-A & 606, add §608, Tax L
Versions Introduced in 2023-2024 Legislative Session:: S1980

2025-S953 (ACTIVE) - Summary

Raises the tax rate on corporate income; increases the state conformity to federal taxation of corporate profit shifting; imposes an additional tax on individual business income in response to federal tax benefits for pass-through business income.

2025-S953 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S953

SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:

An act to amend the tax law, in relation to raising the tax rate on
corporate income; in relation to increasing the state conformity to
federal taxation of corporate profit shifting; and in relation to impos-
ing an additional tax on individual business income in response to
federal tax benefits for pass-through business income

 
PURPOSE:

To generate increased tax revenue for New York State by addressing the
federal under-taxation of corporate profits and pass-through business
income as a result of the 2017 Tax Cuts and Jobs Act.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 of the bill amends subdivision 6-A of section 208 of the Tax
Law to lower the "exempt CFC income" from 95% to 50% of the income
required to be included in a taxpayer's federal gross income.

Section 2 of the bill amends section 210 of the tax law to increase the
corporate tax rate as of January 1, 2024 to 8% on corporations with
income over $2.5 million, 12% on corporations with income over $10
million, and 14% on corporations with income over $20 million.

Section 3 of the bill amends section 210-A of the tax law to raise the
percentage of global intangible low-taxed income included in a corpo-
ration's taxable income from five to fifty percent.

Section 4 of the bill amends subsection kkk of section 606 of the tax
law to reduce the pass-through entity tax rebate to 75%, rather than
100%, of a pass-through business' share of an entity's federal income
tax deduction.

Section 5 of the bill adds section 608 to the tax law, creating an addi-
tional New York state income tax to offset the 20% deduction available
under section 199A of the 2017 tax legislation known as the Tax Cuts and
Jobs Act. Small business owners who benefit from the pass-through
deduction are not subject to this additional tax.

Section 6 is the effective date.

 
JUSTIFICATION:

New York is an exceptionally wealthy state. Treated as a separate coun-
try, it would have one of the world's largest economies. With such a
strong economy, all New Yorkers should have fundamental economic rights:
access to high-quality education, affordable healthcare, guaranteed
housing, and basic social services and social insurance. New York must
also finance investments in green energy, green jobs, and green infras-
tructure in order to mitigate the catastrophic risks of climate change.

New York is also the most unequal state in the nation, in part because
our tax system has not kept pace with changes in the economy, leaving
the many high-earning professionals and wealthy families in this state
undertaxed. Economic growth from recent decades has overwhelmingly bene-
fitted a small segment of elites, while inflation-adjusted wages have
stagnated for the vast majority of working people since the 1970s. The
state government, lacking adequate tax revenues, has been unable to
afford essential public investment and social spending, including
upgrading our infrastructure, repairing public housing, protecting
public education, and financing Medicaid.

While the federal government could aid the states in providing essential
services through progressive tax and spending measures, it instead
continues to give tax benefits to corporate interests. In 2017, the
federal government enacted the tax legislation known as the "Tax Cuts
and Jobs Act" (the "TCJA"), which reduced the corporate tax rate from
35% to 21%. The TCJA also created a 20% deduction for business income
received from pass-through entities --- with additional benefits for the
real estate industry --- and added a global intangible low-taxed income
(GILTI) provision to target multinational corporations hiding profits in
overseas subsidiaries.

Big business, already adept at dodging taxes, hardly needed a tax cut.
Moreover, these tax cuts cost the federal government trillions of
dollars in tax revenues. Tax revenues from corporate income are now at a
historic low. Now, instead of funding desperately needed social services
and social insurance, these revenues have been diverted to artificially
boosting corporate earnings and inflating stock values.

New York can respond to regressive federal tax policy by imposing addi-
tional taxes that offset these cuts. The state is full of both large
corporations and pass-through business owners that were doing perfectly
well before these tax cuts in 2017.

This bill raises New York state corporate tax rate using a graduate rate
structure, where corporations with incomes over $2.5 million pay an 8%
corporate tax rate, corporations making over $10 million pay a 12%
corporate tax rate, and corporations making over $20 million in income
pay a 14% corporation tax rate. For the latter two tax brackets, only
the income over $10 million, and $20 million may be taxed at the 12%.
and 14% rates, respectively.

To address the 2017 20% federal pass-through entity deduction, this bill
also reduces the state pass-through entity tax rebate from 100% to 75%
of a partner's share of the federal pass-through entity tax.  The bill
increases the amount of GILTI included in a corporation's taxable income
for state corporate tax purposes.

 
LEGISLATIVE HISTORY:

S.1980 of 2023-2024 (Hoylman-Sigal): Died in Budget and Revenue

A.3690 of 2023-2024 (Relies): Died in Ways and Means

 
FISCAL IMPLICATIONS:

TBD.

 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to taxable years
commencing on and after such effective date.

2025-S953 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    953
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 8, 2025
                                ___________
 
 Introduced  by  Sens. HOYLMAN-SIGAL, BRISPORT, CLEARE, FERNANDEZ, GONZA-
   LEZ, HINCHEY, JACKSON, MYRIE, PARKER, RAMOS, RIVERA, SALAZAR, SANDERS,
   SERRANO -- read twice and ordered printed,  and  when  printed  to  be
   committed to the Committee on Budget and Revenue

 AN  ACT  to  amend  the  tax law, in relation to raising the tax rate on
   corporate income; in relation to increasing the  state  conformity  to
   federal  taxation  of  corporate  profit  shifting; and in relation to
   imposing an additional tax on individual business income  in  response
   to federal tax benefits for pass-through business income
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph (b) of subdivision 6-a of section 208 of the  tax
 law,  as  amended  by  section  1 of part I of chapter 39 of the laws of
 2019, is amended to read as follows:
   (b) "Exempt CFC income" means (i) except to the  extent  described  in
 subparagraph  (ii) of this paragraph, the income required to be included
 in the taxpayer's federal gross income pursuant  to  subsection  (a)  of
 section  951  of  the internal revenue code, received from a corporation
 that is conducting a unitary business  with  the  taxpayer  but  is  not
 included  in  a  combined  report  with  the  taxpayer, (ii) such income
 required to be included in the taxpayer's federal gross income  pursuant
 to  subsection  (a)  of such section 951 of the internal revenue code by
 reason of subsection (a) of section 965 of the internal revenue code, as
 adjusted by subsection (b) of section 965 of the internal revenue  code,
 and  without  regard  to subsection (c) of such section, received from a
 corporation that is not included in a combined report with the taxpayer,
 and (iii) [ninety-five] FIFTY percent  of  the  income  required  to  be
 included  in  the taxpayer's federal gross income pursuant to subsection
 (a) of section 951A of the internal revenue code, without regard to  the
 deduction  under section 250 of the internal revenue code, received from
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD01693-01-5
 S. 953                              2
 
 a corporation that is not included in a combined report with the taxpay-
 er, less, (iv) in the  discretion  of  the  commissioner,  any  interest
 deductions  directly  or indirectly attributable to that income. In lieu
 of  subtracting  from its exempt CFC income the amount of those interest
 deductions, the taxpayer may make a revocable  election  to  reduce  its
 total  exempt  CFC  income  by forty percent. If the taxpayer makes this
 election, the taxpayer must also make  the  elections  provided  for  in
 paragraph  (b)  of  subdivision six of this section and paragraph (c) of
 this subdivision. If the taxpayer subsequently  revokes  this  election,
 the  taxpayer must revoke the elections provided for in paragraph (b) of
 subdivision six of this section and paragraph (c) of this subdivision. A
 taxpayer which does not make this election because it has no exempt  CFC
 income  will  not  be  precluded  from making those other elections. The
 income described in subparagraphs (ii) and (iii) of this paragraph shall
 not constitute investment income. The income described  in  subparagraph
 (iii)  of this paragraph shall not constitute exempt unitary corporation
 dividends.
   § 2. The opening paragraph  of  paragraph  (a)  of  subdivision  1  of
 section 210 of the tax law, as amended by section 1 of subpart A of part
 I of chapter 59 of the laws of 2023, is amended to read as follows:
   For  taxable  years  beginning  before  January  first,  two  thousand
 sixteen, AND BEFORE JANUARY FIRST, TWO THOUSAND TWENTY-THREE, the amount
 prescribed by this paragraph shall be computed at the rate of seven  and
 one-tenth  percent  of  the taxpayer's business income base. For taxable
 years beginning on or after January first,  two  thousand  sixteen,  the
 amount prescribed by this paragraph shall be six and one-half percent of
 the  taxpayer's business income base.  FOR TAXABLE YEARS BEGINNING ON OR
 AFTER JANUARY FIRST, TWO THOUSAND TWENTY-SIX FOR  ANY  TAXPAYER  WITH  A
 BUSINESS  INCOME BASE FOR THE TAXABLE YEAR OF MORE THAN TWO AND ONE-HALF
 MILLION DOLLARS, THE AMOUNT PRESCRIBED BY THIS PARAGRAPH SHALL BE  EIGHT
 PERCENT  OF THE TAXPAYER'S BUSINESS INCOME BASE; FOR ANY TAXPAYER WITH A
 BUSINESS INCOME BASE FOR THE TAXABLE  YEAR  IN  EXCESS  OF  TEN  MILLION
 DOLLARS, THE AMOUNT PRESCRIBED BY THIS PARAGRAPH SHALL BE TWELVE PERCENT
 OF THE TAXPAYER'S BUSINESS INCOME BASE IN EXCESS OF TEN MILLION DOLLARS;
 FOR  ANY  TAXPAYER  WITH  A BUSINESS INCOME BASE FOR THE TAXABLE YEAR IN
 EXCESS OF TWENTY MILLION DOLLARS, THE AMOUNT PRESCRIBED  BY  THIS  PARA-
 GRAPH  SHALL  BE FOURTEEN PERCENT OF THE TAXPAYER'S BUSINESS INCOME BASE
 IN EXCESS OF TWENTY MILLION DOLLARS. For taxable years beginning  on  or
 after  January  first, two thousand twenty-one and before January first,
 two thousand twenty-seven for any taxpayer with a business  income  base
 for  the  taxable  year  of  more  than five million dollars, the amount
 prescribed by this paragraph shall be seven and one-quarter  percent  of
 the taxpayer's business income base. The taxpayer's business income base
 shall  mean  the  portion  of the taxpayer's business income apportioned
 within the state as hereinafter provided.   However, in the  case  of  a
 small  business  taxpayer,  as defined in paragraph (f) of this subdivi-
 sion, the amount prescribed by this paragraph shall be computed pursuant
 to subparagraph (iv) of this paragraph and in the case of a  manufactur-
 er,  as  defined  in  subparagraph  (vi)  of  this paragraph, the amount
 prescribed by this paragraph shall be computed pursuant to  subparagraph
 (vi)  of  this paragraph, and, in the case of a qualified emerging tech-
 nology company, as defined in subparagraph (vii) of this paragraph,  the
 amount  prescribed  by  this  paragraph  shall  be  computed pursuant to
 subparagraph (vii) of this paragraph.
 S. 953                              3
 
   § 3. Paragraph (b) of subdivision 5-a of section 210-A of the tax law,
 as amended by section 3 of part I of chapter 39 of the laws of 2019,  is
 amended to read as follows:
   (b)  For  New  York C corporations, global intangible low-taxed income
 shall not be included in the numerator of  the  apportionment  fraction.
 [Five]  FIFTY  percent  of  global  intangible low-taxed income shall be
 included in the denominator of the apportionment fraction.
   § 4. Paragraph 2 of subsection (kkk) of section 606 of the tax law, as
 added by section 2 of part C of chapter 59  of  the  laws  of  2021,  is
 amended to read as follows:
   (2)  The  credit  shall  be equal to SEVENTY-FIVE PERCENT OF the part-
 ner's, member's or shareholder's direct share of the pass-through entity
 tax.
   § 5. The tax law is amended by adding a new section  608  to  read  as
 follows:
   § 608. ADDITIONAL TAX. (A) THERE IS IMPOSED AN ADDITIONAL TAX UPON THE
 AMOUNT  OF  AN  INDIVIDUAL'S NEW YORK TAXABLE INCOME THAT CORRESPONDS TO
 ANY DEDUCTION TAKEN PURSUANT TO SECTION 199A  OF  THE  INTERNAL  REVENUE
 CODE,  OR  ANY SUCCESSOR PROVISION THERETO. THIS SECTION SHALL NOT APPLY
 TO A TAXPAYER WITH A FEDERAL TAXABLE INCOME BELOW THE THRESHOLD  AMOUNT,
 AS  DEFINED  IN SECTION 199A(E) OF THE INTERNAL REVENUE CODE, PLUS FIFTY
 THOUSAND DOLLARS FOR A SINGLE FILER TAXPAYER  OR  ONE  HUNDRED  THOUSAND
 DOLLARS IN THE CASE OF A JOINT RETURN.
   (B)  THE  RATE  OF THE ADDITIONAL TAX IMPOSED PURSUANT TO THIS SECTION
 SHALL BE EQUAL TO THE HIGHEST FEDERAL INCOME TAX RATES IN EFFECT FOR THE
 TAXABLE YEAR THAT WOULD APPLY TO THE AMOUNT DEDUCTED UNDER SECTION  199A
 OF  THE  INTERNAL  REVENUE CODE, OR ANY SUCCESSOR PROVISION THERETO, BUT
 FOR THE APPLICATION OF SUCH SECTION. THE AMOUNT OF AN  INDIVIDUAL'S  NEW
 YORK  TAXABLE  INCOME  THAT  CORRESPONDS  TO THE AMOUNT OF ANY DEDUCTION
 TAKEN PURSUANT TO SECTION  199A  IS  THE  AMOUNT  THAT  BEARS  THE  SAME
 RELATIONSHIP  TO  THE  TAXPAYER'S  TOTAL  NEW YORK TAXABLE INCOME AS THE
 AMOUNT DEDUCTED UNDER SECTION 199A BEARS TO THE TAXPAYER'S TOTAL FEDERAL
 TAXABLE INCOME AS DETERMINED WITHOUT REGARD TO SUCH DEDUCTION.
   (C) THE ADDITIONAL TAX UNDER THIS SECTION SHALL BE  ADMINISTERED,  AND
 PENALTIES  SHALL  BE  IMPOSED,  IN  THE  SAME  MANNER AS THE OTHER TAXES
 IMPOSED BY THIS ARTICLE.
   § 6. This act shall take effect immediately and shall apply to taxable
 years commencing on and after such effective date.

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