December 2011 brought good news to many New Yorkers: the Middle Class Tax Cut and Job Creation Plan. Among other things, this Plan reduces income taxes to their lowest levels in over 50 years. In addition, the MTA payroll tax is eliminated.
The Plan was passed in the hope of fostering private sector job creation, increasing spending and investment in New York State. Overall, 4.4 million New Yorkers will pay less income tax in 2012. Because of the MTA payroll tax elimination, approximately 704,000 businesses that currently pay it will no longer have to do so. This includes 290,000 small businesses with payrolls of less than $1.25 million, 415,000 self-employed individuals, and all public and non-public schools. According to the Plan, manufacturers outside of the MTA region will see their corporate tax rates cut in half, providing $25 million in tax savings. The Plan also aims to adjust the personal income tax standard deductions and income brackets for inflation, which will provide about $440 million in tax savings over the next two years for all New York State residents. Additionally, the Plan eliminates the personal income tax PIT surcharge, which will impact 91% of all taxpayers.
The effectiveness of this Plan in rebuilding the New York State economy remains to be seen, but it is definitely a major step in the right direction.
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