Bill
A 10340
New York City would raise unincorporated and corporate tax rates above $5,000,000 of income (to 4.4%), with related credit, carryforward, and banking provisions, pending local rati
Jurisdiction: New York State; City of New York
Primary purpose
- Proposes to increase tax rates on unincorporated business income and on corporate income for taxable years beginning on or after January 1, 2026, upon adoption of a local law by New York City’s local legislative body.
- The changes are designed to raise tax revenue in New York City by applying higher rates to portions of taxable income over certain thresholds.
Key provisions and changes
1) Unincorporated business tax (UBT) rate changes
- General rate for unincorporated businesses operating in NYC remains 4% for taxable years ending after 1966.
- For taxable years beginning on or after January 1, 2026, the portion of unincorporated business taxable income exceeding $5,000,000 is taxed at 4.4% (an increase from 4.0% for that top portion).
- This is in addition to any other taxes imposed.
2) City unincorporated business tax (UBT) under NYC Administrative Code
- Similar structural change as above: 4% general rate, with a top-tier segment over $5,000,000 taxed at 4.4% for taxable years beginning on or after January 1, 2026.
- Applies to unincorporated business income carried on wholly or partly within NYC; also in addition to other taxes.
3) Corporate tax rate framework (non-bank and banking differences)
- For general corporations, the NYC corporate tax framework includes multiple subparagraphs governing how taxable income is allocated and taxed, including distributive shares of unincorporated businesses. The amendments adjust rates and computations where applicable, effective for tax years beginning on or after January 1, 2026.
- Specifically, the bill adjusts rate calculations that apply to:
- Entire net income (tax base) for corporations, including how much income is allocated to NYC.
- The treatment of credits related to unincorporated business income (i.e., how much credit can be used against the tax when a corporation has both corporate and unincorporated business activities).
- Carrier-forward mechanics of any excess credits.
4) Banking corporations and financial entities
- The bill contains adjustments for banks and other financial corporations, including the calculation of the basic tax for financial corporations and corresponding credits or distributive shares when such entities have income from unincorporated businesses.
- There are changes to the denominators and scaling factors used in computing credits and taxes to reflect new rates post-2026 (e.g., denominators adjusted to 10.62% from prior values where applicable).
5) Credit carryforwards and interaction with other credits
- If the calculated credits exceed the tax liability times the applicable fraction, excess credits may be carried forward for up to seven subsequent taxable years.
- In applying credits, the tax liability used for the carryforward calculations is the tax liability after applying the non-credit portions first (i.e., credits are applied after base tax, with carryforwards following).
6) Ratification by NYC local government
- The proposed changes require ratification by NYC’s local legislative body via local law.
- The act provides a framework wherein if sections are ratified, corresponding sections are deemed enacted; if not ratified, the amendments do not take effect.
Effective date and applicability
- The act is positioned to take effect immediately, but sections 2–13 become effective only upon ratification by NYC’s local legislature.
- These sections are deemed to apply to tax years beginning on or after January 1, 2026, contingent on ratification.
Estimated impact
- Citywide revenue increase from higher top-tier rates on unincorporated business income (above $5,000,000 threshold) and adjustments to corporate tax calculations.
- Affects:
- Unincorporated businesses operating in NYC with income above $5 million.
- Corporations with income allocated to NYC, including banks and financial institutions meeting the defined thresholds.
- Non-ratification would leave current tax rates unchanged.
Sponsors
- Major co-sponsors include notable NYC Assembly members: Moreno, Shrestha, Mitaynes, Hevesi, Rosenthal, Wright, González-Rojas, Moreno, Simone, Forrest, Valdez, Steck, Raga, Carroll, R. Kim, etc.
Notes for readers
- The bill is explicitly tied to NYC’s ability to raise revenue through local tax rate adjustments and would require local government action to take effect.
- Details include precise rate changes (4% base to 4.4% on excess income), treatment of high-income portions, and interaction with existing credits and carryforwards.
Compiled from official sources — confirm details with the bill’s official record.
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