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New York State Amendments and Budget Changes

Pursuant to the recently enacted New York State budget amendments, New York is imposing tax increases and new taxes to help it raise revenue to close its projected 2009-2010 budget gap. 

With respect to the Personal Income Tax, for years 2009 thru 2011, New York State has added two higher income tax brackets. For all filing statuses, the top rate for taxable income in excess of $500,000 is 8.97%. The “second to highest” rate is 7.85% and applies to the following tax brackets:

        Filing Status                           Taxable Income

        Single                                    $200,000 to $500,00
        Head of Household                  $250,000 to $500,000
        Married Joint                           $300,000 to $500,000

Of course, the “supplemental tax” still applies to “recapture the benefit of the lower tax brackets”. Accordingly, for taxpayers in the top bracket with incomes between $500,000-$550,000, and taxpayers in the “second to highest bracket” with incomes between $300,000-$350,000, the actual marginal tax rates will be slightly higher. For taxpayers with taxable incomes in excess of $550,000, a flat tax of 8.97% shall apply.

One of the new taxes introduced is the Metropolitan Commuter Transportation Mobility Tax (MCTMT).  This new tax applies to certain employers, self-employed individuals, partners and partnerships that engage in business within the metropolitan commuter transportation district (namely, the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island), Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester).  The tax applies to persons or entities with “self-employment” income, and does not apply to most rental or investment income.

The state’s budget also calls for certain “regular partnerships” to pay a partnership filing fee.  Under the new law, the existing filing fee applicable to LLCs and LLPs will now apply to partnerships (both general and limited) that are doing business in the State of New York. The filing fee applies to tax years beginning in and after 2009, and will be due 30 days after the close of the partnership’s tax year. Regular partnerships will be subject to the filing fee if their New York source gross income is $1,000,000 or greater with the fee ranging from $500 for gross income of exactly $1,000,000 to $4,500 for partnerships that have New York source gross income greater than $25 million.

If you want further information or wish to discuss any of the above, please contact the AVZ professional that services your account, or feel free to contact Jim O’Connor, Tax Principal, at 631-434-9500 (or at via email at joconnor@avz.com).