Hochul to put forward 'no tax on tips' proposal in New York

New York Gov. Kathy Hochul (D) will put forward a “no tax on tips” proposal in her New York Executive Budget proposal for fiscal 2027, her office announced Thursday.

Hochul, who’s gearing up for a reelection bid this November, will be proposing that up to $25,000 on tipped income would be exempt from state income taxes during the 2026 tax year. 

“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, with her office saying that the governor’s tax relief efforts have accumulated to more than $9 billion since she became the state’s top executive.  

President Trump touted a “no tax on tips” proposal during the 2024 election particularly while campaigning in Nevada — a state whose economy is largely dominated by the tourism and service industry. Former Vice President Kamala Harris, Trump’s then-rival, later backed the “no tax on tips” proposal. 

Republicans passed Trump’s mega GOP policy bill last year, which included a “no tax on tips” provision that gives a maximum $25,000 deduction for tipped employees who make up to $150,000. The threshold for joint filers is $300,000. 

The legislation also provides a smaller maximum annual deduction for tax on overtime.

White House officials had criticized Hochul for not adopting the plan within the state.  

“Disgraceful: ‘Gov. Kathy Hochul and Democratic New York lawmakers haven’t extended President Trump’s ‘no tax on tips’ policy to state income taxes — hitting bartenders and restaurant workers in the pocketbook all while preaching affordability,’” White House press secretary Karoline Leavitt wrote on social platform X last week, linking to a New York Post story on Hochul not incorporating the proposal in New York.

Hochul is running against Nassau County Executive Bruce Blakeman (R) in November as she vies for a second term. Blakeman clinched Trump’s endorsement shortly after Rep. Elise Stefanik (R-N.Y.) dropped out of the GOP primary. 

Polling shows Republicans have an uphill climb ahead, particularly as Democrats are favored to have a good political environment in the midterm season. A Siena Poll released in mid-December showed Hochul leading Blakeman by 25 points.