Hochul Eyes Tax Hike: Will New York Drive Out Its Businesses?

Paul Riverbank, 11/15/2025Facing a $35B shortfall, New York weighs tax hikes—will businesses flee or stay put?

In Governor Kathy Hochul’s office, there’s a palpable unease. Once, she waved off tax hikes on corporations, calling them a risky move that could chase businesses elsewhere. Yet, as the numbers worsen, Hochul seems to be reconsidering. “Everything’s on the table,” says one advisor. That might not sound like a confession, but in the language of Albany politics, it’s as close as you’ll get.

New York’s corporate tax sits at 7.25 percent. Nationally, that’s on the higher side, but nothing extreme compared to a handful of other states. Still, there’s talk—some whispered, some shouted—of stretching that rate into double digits. Just a few blocks south, Mayor-elect Zohran Mamdani has floated numbers as high as 11.5 percent. That’s not just a one-step increase; it’s a leap that could jolt the way companies think about doing business in New York.

The personal income tax, for now, is untouched—an almost sacred line politicians are unwilling to cross, at least publicly. Last year, it brought in nearly $54 billion, shouldering the load for schools, healthcare, public safety, and more. Yet, with federal relief shrinking and city leaders promising new services, state officials say they feel squeezed.

Mamdani, newly minted as the city’s leader, didn’t win by playing it safe. His campaign promised the moon: universal child care, free bus rides, even city-run grocery stores for families stuck far from affordable food. Each initiative, in isolation, is popular; taken all together, they carry a price tag that makes even seasoned lawmakers squirm. Critics are already hounding him: How do you pay for all this without wrecking the economy?

Look back to 2009 for a moment—that year, battered by recession, New York’s leaders cut and scraped their way through a budget crisis that forced some tough, unpopular decisions. State Comptroller Thomas DiNapoli draws a direct line: He warns that gap would be smaller if officials reined in new spending instead of layering on more programs while federal dollars dry up.

Dueling statements fly between camps. Hochul’s skeptics blast her for flip-flopping—just last year, they note, she’d said raising corporate taxes would slam the door on local business. Her allies, meanwhile, argue that careful planning can blunt any harm. The debate, predictably, is louder than ever.

The governor and incoming mayor have been meeting behind closed doors, trading ideas on how to handle the fiscal mess—and how to respond if the federal government sends a surge of law enforcement to the city, as some in Washington have hinted. Both leaders are wary of federal intervention in policing, but neither can afford to ignore the dollars at stake.

So, for now, New York’s businesses—large corporate headquarters and corner deli owners alike—are left to guess at what comes next. Will an extra tax push a family-run shop out of business? Will another tech startup shift its offices to Boston or Austin? Albany’s politicians like to remind reporters that tax hikes are “absolutely a last resort.” But those reassurances sound a little less convincing as the budget deadline creeps closer.

No one quite knows which way the chips will fall. The only certainty is that, whatever happens, New York’s fiscal future hangs on the next few months of bargaining and brinksmanship. And as the state’s leaders try to square the books, everyone—from Wall Street to Main Street—is trying to read the tea leaves, hoping they won’t be left holding the bill.

For years, Albany could count on generous help from Washington to prop up New York’s finances, but that safety net’s fraying—and state leaders suddenly find themselves peering over a fiscal cliff. Budget officials are looking at shortfalls that, together, could reach nearly $35 billion in just a few years. Even the most guarded among them can’t ignore the looming question: where will the money come from?In Governor Kathy Hochul’s office, there’s a palpable unease. Once, she waved off tax hikes on corporations, calling them a risky move that could chase businesses elsewhere. Yet, as the numbers worsen, Hochul seems to be reconsidering. “Everything’s on the table,” says one advisor. That might not sound like a confession, but in the language of Albany politics, it’s as close as you’ll get.New York’s corporate tax sits at 7.25 percent. Nationally, that’s on the higher side, but nothing extreme compared to a handful of other states. Still, there’s talk—some whispered, some shouted—of stretching that rate into double digits. Just a few blocks south, Mayor-elect Zohran Mamdani has floated numbers as high as 11.5 percent. That’s not just a one-step increase; it’s a leap that could jolt the way companies think about doing business in New York.The personal income tax, for now, is untouched—an almost sacred line politicians are unwilling to cross, at least publicly. Last year, it brought in nearly $54 billion, shouldering the load for schools, healthcare, public safety, and more. Yet, with federal relief shrinking and city leaders promising new services, state officials say they feel squeezed.Mamdani, newly minted as the city’s leader, didn’t win by playing it safe. His campaign promised the moon: universal child care, free bus rides, even city-run grocery stores for families stuck far from affordable food. Each initiative, in isolation, is popular; taken all together, they carry a price tag that makes even seasoned lawmakers squirm. Critics are already hounding him: How do you pay for all this without wrecking the economy?Look back to 2009 for a moment—that year, battered by recession, New York’s leaders cut and scraped their way through a budget crisis that forced some tough, unpopular decisions. State Comptroller Thomas DiNapoli draws a direct line: He warns that gap would be smaller if officials reined in new spending instead of layering on more programs while federal dollars dry up.Dueling statements fly between camps. Hochul’s skeptics blast her for flip-flopping—just last year, they note, she’d said raising corporate taxes would slam the door on local business. Her allies, meanwhile, argue that careful planning can blunt any harm. The debate, predictably, is louder than ever.The governor and incoming mayor have been meeting behind closed doors, trading ideas on how to handle the fiscal mess—and how to respond if the federal government sends a surge of law enforcement to the city, as some in Washington have hinted. Both leaders are wary of federal intervention in policing, but neither can afford to ignore the dollars at stake.So, for now, New York’s businesses—large corporate headquarters and corner deli owners alike—are left to guess at what comes next. Will an extra tax push a family-run shop out of business? Will another tech startup shift its offices to Boston or Austin? Albany’s politicians like to remind reporters that tax hikes are “absolutely a last resort.” But those reassurances sound a little less convincing as the budget deadline creeps closer.No one quite knows which way the chips will fall. The only certainty is that, whatever happens, New York’s fiscal future hangs on the next few months of bargaining and brinksmanship. And as the state’s leaders try to square the books, everyone—from Wall Street to Main Street—is trying to read the tea leaves, hoping they won’t be left holding the bill.