A report from New York State Comptroller Thomas P. DiNapoli examines the effects of new federal tax provisions enacted under Public Law No: 119-21 in July. The analysis focuses on how these changes, which include permanent extensions of many elements from the 2017 Tax Cuts and Jobs Act (TCJA), will impact New Yorkers, particularly those with lower and middle incomes.
“Many of the tax benefits in the federal legislation passed in Washington this summer will continue to go to those with higher incomes,” DiNapoli said. “This was a lost opportunity to improve the tax code; instead, the new federal law adds complexity and creates inequities. Low-and middle-income New Yorkers will see few long-term benefits while bearing most of the burden of the bill’s significant spending cuts to vital programs.”
The TCJA introduced measures such as a higher standard deduction and an increased child tax credit that helped reduce taxes for many residents. The latest law makes several of these provisions permanent but also introduces temporary deductions aimed at seniors and working-class taxpayers, including deductions for tip income, overtime pay, and interest on new car loans. These are only available for tax years 2025 through 2028 and are limited to taxpayers with Social Security numbers.
The Joint Committee on Taxation (JCT) projects that more than one-third of net tax reductions in 2027 will benefit individuals earning over $500,000—a share over ten percentage points higher than under previous law. The JCT also estimates that these changes will decrease federal revenues by more than $5.1 trillion over ten years, potentially reducing funds distributed to states and local governments.
The report notes that some new deductions target a narrow group or treat similar workers differently. For instance, about six percent of jobs in New York involve tipped occupations like wait staff or delivery drivers; these workers could see their federal tax burden eliminated through new deductions, while others such as childcare workers may not benefit.
Once temporary provisions expire in 2031, JCT estimates show that people earning less than $30,000 annually will face increased federal taxes.
The law also sets a permanent cap on state and local tax (SALT) deductions at $10,000 but temporarily raises it for certain income groups until 2030 before reverting back. In 2023, over 1.5 million New Yorkers itemized SALT deductions; most had payments above the cap. Under temporary increases, nearly all filers earning less than $100,000 would fully deduct their SALT payments.
Changes to credits affecting families are mixed: starting in 2025 the child tax credit rises to $2,200 per child and is indexed for inflation after that year; however, its refundable portion is reduced and no longer indexed—limiting help for lower-income households. In 2022 almost two million New Yorkers claimed $6.1 billion via this credit.
For childcare expenses specifically, while eligibility criteria have been adjusted slightly upward for lower earners (income tax provisions under TCJA or federal actions threatening food insecurity.
