New York Approves $2B Inflation Relief Refunds and Permanent Middle-Class Tax Cuts

As part of its FY2026 state budget, New York has approved a $2 billion inflation relief package aimed at providing direct financial support to over 8 million residents. Announced by Governor Kathy Hochul on May 6, 2025, this initiative also includes the most significant middle-class tax cuts the state has seen in decades — all while expanding social programs like universal school meals.

Here’s what the package includes and why it matters for taxpayers, CPAs, and financial advisors across the state.

What’s in the Inflation Refund Package?

Under the newly signed budget, New Yorkers will receive one-time refund checks this year, issued automatically based on 2024 tax filings:

• $400 for joint filers with income up to $150,000

• $300 for joint filers earning up to $300,000

• $200 for single filers earning up to $75,000

• $150 for single filers earning up to $150,000

  
  

No application is needed — checks will be sent to the same address or bank account used on recent state tax returns.

Permanent Middle-Class Tax Cuts

In addition to the one-time payments, the FY2026 budget introduces nearly $1 billion in permanent tax reductions for middle-income New Yorkers.

• Personal income tax rates for mid-tier brackets will be lowered to their lowest level in 70 years

• The cuts are structured to phase in over multiple years for sustainable budget alignment

  
  

This move positions New York to better compete with lower-tax states while giving working families consistent annual relief.

Universal Free School Meals and Family Savings

The budget also funds universal free school meals for all public school students — covering both breakfast and lunch statewide.

• This program will reach 2.7 million students

• Estimated family savings: $165 per child per month

  
  

It’s a major win for household budgets, especially in higher-cost urban areas where school lunch costs can add up quickly.

Why It Matters

For CPAs, financial planners, and payroll professionals, this development impacts both immediate planning and long-term strategy:

• Refund timing: Clients should expect direct deposits or mailed checks in the coming months

• Income adjustments: Permanent rate cuts may influence state tax projections for 2025 and beyond

• School meal savings: Parents can reallocate monthly budgets as meals are subsidized

• Client outreach: This is a proactive moment to advise eligible households on adjusting withholdings or revisiting their 2025 estimated payments

  
  

Final Thought

New York’s latest budget reflects a growing trend among states: pairing targeted inflation relief with long-term tax policy reforms to support working families. With refund checks going out and new rate tables coming into effect, this is an essential update for any tax professional serving clients in New York.

At Bizora AI, we’ll continue to monitor implementation timelines and provide real-time insights to keep firms and clients ahead of key state-level tax changes.