What's happening
This bill reduces the sales tax rate from 4% to 2% on purchases from small, independent, New York-based businesses.
Why it matters
Supports small, local businesses. By cutting the sales tax rate in half for purchases from small, independently owned, New York-based businesses (with 20 or fewer employees), the bill aims to give these businesses a competitive edge over larger corporations and online retailers.
Encourages consumer spending locally. Lower sales tax on qualifying purchases could incentivize consumers to shop at small businesses, potentially increasing foot traffic and revenue for neighborhood stores and service providers.
Potentially impacts state and local tax revenues. While helping small businesses, the bill could reduce overall sales tax collections from qualifying purchases, which may have budgetary implications for public services funded by sales tax revenue.
Defines eligibility clearly. The bill specifies requirements—businesses must be independently owned, not dominant in their field, resident in New York, and have 20 or fewer employees—ensuring the tax break targets genuinely small, local enterprises.
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Who cares
Qualifying small businesses
New York businesses with 20 or fewer employees that are independently owned and operated and not dominant in their field would have the state sales tax rate on their taxable sales reduced from 4% to 2%.
Customers of qualifying businesses
Buyers would pay a 2% state sales tax instead of 4% on taxable goods and services purchased from these businesses.
Larger businesses and other nonqualifying sellers
Their sales would remain subject to the 4% state rate while qualifying small-business competitors would offer the lower rate.
New York State tax administrators
They would need to administer the reduced rate beginning with the sales tax quarter starting at least 90 days after the bill becomes law.
Headline styles
Lower Taxes for Small Businesses
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to budget and revenue
- Referred to budget and revenue
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Cut Small Business Sales Tax
In Assembly Committee · Ways And Means · Sponsor Jo Anne Simon
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1115
2025-2026 Regular Sessions
IN SENATE
January 8, 2025
Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when printed to be committed to the Committee on Budget and Revenue
AN ACT to amend the tax law, in relation to the imposition of sales taxes on goods or services purchased from certain businesses
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The opening paragraph of section 1105 of the tax law, as amended by chapter 72 of the laws of 1971, is amended to read as follows:
On and after June first, nineteen hundred seventy-one, there is hereby imposed and there shall be paid a tax of four percent; provided, however, that when the goods or services are purchased from a business which employs twenty or less persons, is resident in this state, is independently owned and operated and is not dominant in its field, the amount of tax paid on such sale shall be two percent, upon:
§ 2. This act shall take effect on the first day of the sales tax quarterly period, as described in subdivision (b) of section 1136 of the tax law, next commencing at least 90 days after this act shall have become a law and shall apply in accordance with the applicable transitional provisions of sections 1106 and 1217 of the tax law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02812-01-5
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to the imposition of sales taxes on goods or services purchased from certain businesses
Purpose or general idea of bill
This bill will help small businesses by lowering the sales tax rate for goods and services purchased.
Summary of provisions
Section one of this bill amends the opening paragraph of Tax Law Section 1105 to provide that the state sales tax for purchases from a small business with twenty or fewer employees shall be two percent.
Section two states the effective date.
Justification
According to the statistics released by the United States Small Business Commission, in 2020, 47.1 percent of New York employees were employed by one of the 2.2 million New York small businesses. Additionally, in 2020, the top industries with the greatest percentage of small business employees were Agriculture, Forestry, and Fishing and Hunting (91.3%), Construction (90.0%), and Other Services (except Public Administration) (84.6%). Further, New York's small businesses accounted for over half of the state's exports in 2021.
While these statistics are impressive, a report by the Small Business & Entrepreneurship Council found that New York ranked 44th in the Small Business Tax Index in 2019, which assesses how 26 tax-related measures impact small businesses. We must support small businesses in order to grow our economy and increase job opportunities across the state. This bill will help small businesses in retail trade, New York's second larg- est employment sector, thrive and expand.
Prior legislative history
2024: S283 - Referred to Budget and Revenue
2023: S283 - Referred to Budget and Revenue
2022: S1083 - Referred to Budget and Revenue
2021: S1083 - Referred to Budget and Revenue
2020: S4557A - Referred to Budget and Revenue
2019: S4557A - Referred to Budget and Revenue
Effective date
This act shall take effect on the first day of the sales tax quarterly period, as described in subdivision (b) of section 1136 of the tax law, next commencing at least 90 days after this act shall have become a law and shall apply in accordance with the applicable transitional provisions of sections 1106 and 1217 of the tax law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.