Both the U.S. federal corporate tax rate and New York State’s corporate tax rate have fallen steadily since the 1960s. The 2017 tax law known as the “Tax Cuts and Jobs Act” cut the U.S. federal corporate tax rate from 35 percent to 21 percent, bringing it to its lowest level since 1942. New York State’s corporate tax rate gradually fell from 8.5 percent in 2000 to a low of 6.5 percent in 2016 (under then-Governor Andrew Cuomo) — the lowest rate since 1967. The corporate tax rate remained at its historic low of 6.5 percent until 2021, when it was increased to 7.25 percent for corporations with over $5 million in profits.
Due to the 2021 tax increase, New York’s corporate tax raised a total of nearly $9 billion in fiscal year 2023. While the state projected increased corporate tax revenue of $2.6 billion in fiscal years 2022 through 2024, the tax increase exceeded initial expectations by $750 million, bringing in a total of $3.4 billion over these three years.
If New York cuts its corporate tax rate this year, returning the rate to 6.5 percent, the impact on state revenue will be significant: The state will lose $1.2 billion in fiscal year 2025. Revenue losses will begin in the last quarter of fiscal year 2024, costing the state nearly $300 million for that quarter.