With the approval of New York State’s 2010-2011 budget came some significant new tax laws. Many of the new laws were related to business tax credits or specific transactions that will mostly affect large corporations. However, there were a few new laws that will affect high income individuals and one change that will affect every New Yorker.
Charitable Contributions Deduction
The budget included a new law that limits the personal income tax deduction for charitable giving. Effective for tax years beginning after 2009 and ending before 2013, the deduction will be limited to 25% of the federal deduction for taxpayers who have New York State or New York City adjusted gross income of over $10 million.
New York City Personal Income Tax Rate
The top New York City personal income tax rate was increased from 3.2% to 3.4% for those with income over $500,000 per year. This is effective as of January 1, 2010. However, if you fall into this tax bracket, your paycheck withholding rates will increase as of September 1, 2010.
Sales Tax Clothing Exemption Suspended
The state decided to temporarily suspend the state sales tax exemption for clothing and footwear costing under $110. Luckily the state decided to wait until after back-to-school shopping season. The exemption is suspended from October 1, 2010 through March 31, 2011. After that it will be reinstated in two stages. From April 1, 2011 through March 31, 2012, the exemption will apply for clothing and footwear costing under $55. On April 1, 2010, the full exemption will be reinstated to cover clothing and footwear costing under $110. Local governments have the option of following these rules or continuing with their own clothing exemptions as usual.