BILL NUMBER: S540
TITLE OF BILL :
An act to amend the tax law, in relation to the personal income tax
table benefit recapture; to repeal subsection (d) of section 601 of
such law relating to personal income tax; and providing for the repeal
of certain provisions upon expiration thereof
This legislation would raise the cap for incomes subject to the
SUMMARY OF LEGISLATION :
Amends section 601(d) of the Tax Law, to alter the tax benefit
recapture (or supplemental tax) to raise the income levels for
different filing status using a graduated scale. The levels at which
each status would proportionally lose their ability to tax their
incomes at lower rates is changed from between $100,000 to $150,000
for everyone, to $125,000 to $175,000 for heads of households and
$150,000 to $200,000 for married-joint filers. Single individuals
would use the existing schedule of $100,000 to $150,000. In addition,
subsection (d-1) shall not apply to taxpayers who are small businesses
as defined by the economic development law and whose gross receipts or
sales from their business are greater than $10,000.
EXISTING LAW :
Currently, personal income tax payers that have adjusted gross income
(AGD between $100,000 and $150,000 proportionally lose the benefit of
having their income below $20,000 (single), $30,000 (head of
household), or $40,000 (married~joint) taxed at a lower rate.
Taxpayers with an AGl of $150,000 or above, lose this benefit
completely and all of their income is taxed at the highest rate.
The average income of families has increased over the last several
years. More and more middle class citizens are finding themselves in
the "highest" tax bracket. As a result more and more working families
are subject to the supplemental tax, increasing their overall tax
The tax benefit recapture (or supplemental tax) was enacted in 1991.
It has never been indexed for inflation, nor does it utilize a
graduated scale for different tax filing status (single,
head-of-household, married-joint). Therefore, an individual with no
dependents making $100,000 is currently treated the same as a family
of four with two incomes making $100,000 combined. This section of the
tax law has in fact operated as a marriage penalty, further inhibiting
the desires of young working families desire to live and raise their
families in New York.
Thus, this legislation would raise the cap on income levels triggering
the supplemental tax in an effort to decrease the tax burden on joint
filers and heads-of-households.
LEGISLATIVE HISTORY :
2007- Passed Senate; 2008 -Finance
FISCAL IMPLICATIONS :
To be determined.
EFFECTIVE DATE :
This act shall take effect immediately and shall apply to taxable
years starting on or after January 1, 2010; provided, however that
section two of this act shall expire and be deem repealed January 1,
2013 and section three of this act shall take effect January 1,2013.