What's happening
This bill exempts retail and food service businesses in Manhattan with annual base rent under $1 million from the commercial rent tax.
Why it matters
Could significantly lower operating costs for small and independent retail and food service businesses in Manhattan,. making it easier for them to survive in a high-rent environment and possibly reducing the rate of store closures.
May encourage more entrepreneurs and small businesses to open or expand in Manhattan,. as the exemption removes a substantial tax burden for those paying under $1 million in annual base rent.
Could help preserve the diversity and character of Manhattan’s retail and dining landscape,. potentially slowing the trend of vacant storefronts and the dominance of large chains that can better absorb high rental costs and taxes.
Might reduce tax revenue for the city in the short term,. but supporters could argue this is offset by the economic and community benefits of sustaining more local businesses and possibly maintaining or increasing overall commercial activity.
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Who cares
Headline styles
Cut Rent Taxes for Businesses
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to cities 1
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 Rent Taxes for Businesses
In Assembly Committee · Cities · Sponsor Alex Bores
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
451
2025-2026 Regular Sessions
IN SENATE (Prefiled)
January 8, 2025
Introduced by Sen. HOYLMAN-SIGAL -- read twice and ordered printed, and when printed to be committed to the Committee on Cities 1
AN ACT to amend the administrative code of the city of New York, in relation to reducing certain commercial rent taxes for premises occupied by certain retail and food services businesses
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraph 2 of subdivision h of section 11-704 of the administrative code of the city of New York, as amended by local law number 63 for the year 1997, is amended to read as follows:
(2) In the case of any taxable premises located in the borough of Manhattan south of the center line of ninety-sixth street, the base rent for such premises shall be reduced by (i) fifteen percent for the period beginning March first, nineteen hundred ninety-six and ending May thirty-first, nineteen hundred ninety-six, (ii) twenty-five percent for the period beginning June first, nineteen hundred ninety-six and ending August thirty-first, nineteen hundred ninety-eight, and (iii) thirtyfive percent for periods beginning September first, nineteen hundred ninety-eight and thereafter, such reduction to be made after all other exemptions and deductions authorized by this chapter have been taken, except that the base rent for a taxable premises which is occupied by a retail business or food services business with an annualized base rent of less than one million dollars shall be reduced by one hundred percent.
§ 2. This act shall take effect on the first of July next succeeding the date on which it shall have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD01957-01-5
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the administrative code of the city of New York, in relation to reducing certain commercial rent taxes for premises occupied by certain retail and food services businesses
Summary of specific provisions
Section 1 of the bill amends section 11-704(h)(2) of the New York City Administrative Code ("Exemptions and deductions from base rent") to exempt taxable commercial retail and food services premises with an annualized base rent of less than $1 million from the Commercial Rent Tax levied on premises in Manhattan south of 96th Street.
Section 2 of the bill is the effective date: July 1st, next succeeding the date on which it shall become law.
Justification
New York City's restaurant, retail, and recreation businesses were hard- est hit during the pandemic. These sectors lost 169,700 jobs since 2020-41% of all private sector jobs lost in New York City during the pandemic, according to Comptroller DiNapoli. Restaurants in particular laid off 70% of their workforce in March 2020, and the industry has yet to recover to pre-pandemic levels. Retail jobs, too, are down 11% since before the pandemic.
New York City currently imposes an effective 3.9% tax on commercial tenants with a base rent $250,000 or more that are located in Manhattan south of 96th Street. Though New York City relaxed that tax burden in 2018 by exempting businesses with income less than $5 million and rents under $500,000 from the Commercial Rent Tax, hundreds of small busi- nesses continue to pay out year after year. As Manhattan rents continue to rise and inflation squeezes the industry's already tight profit margins, New York's restaurants and retailer s are struggling to make ends meet. New York state can ease the burden on these small businesses and recovering industries by exempting them from the commercial rent tax.
The original tax was enacted in 1963, and today New York and Florida are the only two jurisdictions to levy a tax on commercial rents. The relief this carveout would deliver to struggling industries is enormous, but the impact on tax revenues would be manageable: food and retail businesses made up just 18.9% of commercial rent taxpayers and 17.6% of commercial rent tax liability in 2022.
In 2019, New York restaurants and retailers employed over 600,000 people, paid over $26 billion in wages, and made nearly $82 billion in taxable sales. Granting this relief will allow hundreds of businesses to keep their doors open, lower the burden for New Yorkers looking to start a business, and assist these crucial industries in returning to their pre-pandemic levels of productivity.
Prior legislative history
S.6555 of 2023-2024 (Hoylman-Sigal): Died in Cities
Fiscal implications
To be determined.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.