Buffalo, NY (WBEN) - A proposal in Governor Hochul's budget calls for tips to not be taxed on 2026 returns. One tax expert says those who would be affected most may not get the full benefits.
The Tax Lady Esther Gulyas says this would benefit those who work in the entertainment, food and service industries. "I would think that it could save anywhere from $500 to $1,500 for the average person that receives tip income or overtime, because they're proposing overtime as well," says Gulyas.
She says as long as single income doesn't exceed $150,000 or married couple income doesn't exceed $300,000, you would be eligible. "Let's assume it's $25,000 for each and somebody worked overtime and had tip income. Then there would be a subtraction on the federal return in New York State. That subtraction would not be part of the computation you would pay taxes this year on both tips and overtime. However, what they're proposing is for the 2026 year through 2028 that tip income and overtime income also be deductible on New York State," explains Gulyas.