Tax Cuts.

As part of a plan to help the state's economic recovery from the COVID-19 pandemic, New York Governor Kathy Hochul this week proposed providing small businesses with tax relief.

The relief would take the form of a higher tax return adjustment (called a “subtraction modification”), which reduces a business's gross taxable income by an amount equal to a certain percentage of its net income — before calculating the amount of tax owed.

New York State law currently allows a 5 percent subtraction modification for sole proprietorships (and farm businesses) with gross incomes under $250,000. Hochul aims to raise this modification and include other entities with New York source income as high as $1.5 million.

The plan would impact some 195,000 small businesses across the state, providing a total of $100 million in tax relief

71 percent of small businesses in New York still report negative effects from the pandemic, according to the U.S. Census Bureau Small Business Pulse Survey.

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