NEW YORK (BLOOMBERG) -- Governor Kathy Hochul is considering raising corporate taxes as part of broader efforts to close a potential budget shortfall and help fund some of Zohran Mamdani’s agenda as New York City mayor, according to a person with knowledge of the matter.
Hochul, who endorsed Mamdani’s candidacy before the Nov. 4 election, is weighing additional levies to help fund universal childcare, one of Mamdani’s core priorities, said the person, who asked not to be identified because the talks are private.
A spokesperson for Hochul didn’t respond to request for comments.
Mamdani, who assumes office in January, has estimated providing free childcare, buses and a slew of other services will cost about $10 billion. The Queens assembly member campaigned on raising taxes on corporations and the wealthy to help pay for his agenda, although most tax policy is determined by state lawmakers and the governor.
Raising taxes would mark a shift for Hochul, who’s up for re-election in 2026 and has rejected calls for new taxes, warning they would drive away businesses and high earners who supply much of the state’s revenue. In addition to the pressure to help Mamdani, who won with just over 50% of the vote, Hochul is facing funding cuts under President Donald Trump’s new budget law that the state will need to offset.
Mamdani and Hochul met at the governor’s office in Manhattan on Thursday to consider a range of issues, including childcare and developing a policy for fiscal year 2027 and beyond.
Mamdani has said he wants to lift the top state corporate tax rate to 11.5% from 7.25% to match New Jersey. For businesses in New York City, that would mean a combined effective tax rate of nearly 19%, the highest in the country. In an interview with Bloomberg in September, Hochul said she was “very sensitive to competitiveness with other states.”
New York’s budget director, Blake Washington, said this week that the state was “in a good spot financially” thanks to higher-than-anticipated revenue from Wall Street and personal income tax collections that are projected to give a $5.3 billion boost to the next fiscal year. Washington said that higher taxes were a last resort and “the last thing on my mind.”
But the full impact of Trump’s cuts isn’t fully understood and the state will have several items to tackle next year, according to the person close to Hochul. The state projects a total $4.2 billion budget gap for fiscal 2027.
Politico first reported that Hochul is weighing potential corporate tax hikes.
While Hochul supports Mamdani’s goal of free childcare, she has warned the price tag for one year of it in New York City alone would cost $7 billion.
“I have to double that for the rest of the state,” she told reporters in September. Instead, she has proposed managing a rollout over time.
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