Skip to content
Join our Newsletter

State Budget Draft Includes Tax Breaks for Developers, Money for Schools

After missing the April 1 deadline, Governor Kathy Hochul said her administration is close to a budget deal.
Governor Kathy Hochul makes an announcement on the FY 2025 budget.

Governor Kathy Hochul on Monday announced she had a conceptual agreement with legislative leaders on key priorities in the Fiscal Year 2025 New York State Budget.

Albany legislators and the governor have been hammering out details for the FY 2025 budget for the past several weeks as they blew past the deadline of passing the budget on April 1. 

The budget looks to include more money for schools and a housing package that includes a replacement of the 421a, an expired tax incentive heavily used by real estate developers to build new apartment buildings that includ affordable housing units, according to a news release.

The budget draft also includes new penalties on retail theft offenders and the ability for the Office of Cannabis Management to padlock an illegal smoke shop for a full year. 

Some highlights include:

  • Funding for P-12 schools; investing a record $35.9 billion in total school aid, including $24.9 billion in Foundation Aid; lowering the inflation factor in the Foundation Aid formula to right-size funding for the 2024-25 school year and commissioning a Rockefeller Institute study to examine the Foundation Aid formula to prepare for changes next year; ensuring every school district utilizes instructional best practices grounded in the Science of Reading to improve reading proficiency among New York kids.
  • Creating a new 485x tax incentive for affordable housing; extending the 421a incentive for projects already in the pipeline; making it easier to convert unused office space into affordable housing; eliminating outdated density caps in New York City; unlocking the potential of units that have been vacant since 2019; establishing a new law to protect tenants from price gouging. 
  • Creating a statewide tax incentive for multi-family housing; making $650 million in discretionary funds exclusively available to Pro-Housing Communities; providing incentives for communities that want more accessory dwelling units; investing $500 million to develop up to 15,000 new housing units on State-owned sites; and protecting homeowners from deed theft.
  • Funding mass transit systems statewide, including $7.9 billion in operating aid for the MTA, $333 million for upstate transit systems, and $551 million for non-MTA downstate systems, a 5.4 percent increase in funding.
  • Cracking down on retail theft by increasing penalties for offenders who assault retail workers; $40.2 million for retail theft enforcement; and a $3,000 tax credit for business owners to invest in security resources.
  • Shutting down illicit cannabis storefronts by authorizing the Office of Cannabis Management (OCM) to padlock businesses for a full year; allowing local governments to pass laws to execute padlock orders; establishing fines for landlords knowingly renting to retailers selling cannabis without a license.

“I promised to fight the right fights for New Yorkers, deliver common sense solutions, and tackle the thorny issues that others might ignore, and that's exactly what we’ve done,” Hochul said. “We’re delivering on a common-sense agenda: fighting crime, fixing our mental health system, and building more housing so people can finally afford to live in New York.”

With a conceptual agreement in place, the legislative houses are expected to pass bills that will enact these priorities, according to the news release. 

Based on a preliminary assessment of the negotiated changes to the Executive proposal, the total budget for FY 2025 is currently estimated at $237 billion. The FY 2025 budget does not raise income or statewide business taxes and maintains state reserves at the gold standard of 15% for a “rainy day.”