Tax Cuts 2001 and 2002

Tax Cuts 2001 and 2002

Since taking office in 1995, Governor Pataki has made cutting taxes the cornerstone of his economic development policies for the State of New York. Recognizing that taxes impede business growth and expansion, and deprive citizens of the power to make choices for their future, the State of New York has enacted a broad-based initiative to reduce taxes across the entire personal income and business tax spectrum. Under Governor Pataki’s leadership, New York State has cut 19 different taxes, 57 different times which will save New Yorkers more than $100 billion when fully phased in.

Tax cuts and changes of particular interest:

For tax years that began after June 30, 2001, the corporate franchise tax rate equaled 7.5 percent, down from the previous 9 percent. For small business taxpayers, the rate decreased from 7.5 percent for tax years that began after June 30, 1999 to 6.85 percent for tax years that began after June 30, 2003.
New York=s S Corp tax has seen a continuous series of reductions from .975 percent in tax years that began July 1, 1999 through June 30, 2000 to .3575 percent for years that began July 1, 2003 and thereafter. Small S Corps will saw their rate drop from .05 percent to .0275 percent during the same period.
On April 1, 2001 the Petroleum Business Tax was reduced 20 percent for diesel motor fuel and residual oil used for non-residential heating. On the same date businesses became eligible for full reimbursement of the petroleum business tax paid on diesel and residual oil used in mining and/or extracting operations.
In Fiscal Year 2002 all PBT receipts became dedicated revenue streams that support important state projects and were no longer deposited into the state=s General Fund.
Bank and Insurance tax rates dropped from 8.5 percent to 8.0 percent for tax years that began after June 30, 2001 and before July 1, 2002. The rate further dropped to 7.5 percent for those tax years that began on or after July 1, 2002.
In an effort to bring greater fairness to the personal income tax rate structure, the state of New York is moving vigorously to eliminate the Amarriage penalty@ on married couples who file joint returns. In 2001 the standard deduction increased to $13,400 and further increased in $14,200 in 2002. In 2003 the deduction will again climb to $14,600.
To help ensure that every New Yorker has access to educational opportunities beyond secondary school, the state instituted an itemized deduction for qualified higher education expenses. In 2001 taxpayers were able to claim 25 percent of qualifying expenses. This percentage increased to 50 percent in 2002, and will increase to 75 percent in 2003 and 100 percent in 2004.
A cornerstone of Governor Pataki=s Welfare-to-Work program, and a critical component to improving the standard of living for all low and moderate income New York taxpayers is the Earned Income Tax Credit. Introduced by the federal government, the State of New York seized upon this program to provide an additional state benefit. In 2001 the state credit equaled 25 percent of the federal credit and is scheduled to increase to 27.5 percent in 2002 and 30 percent in 2003.

Last Modified: November 14, 2003