Nearly 8 million Americans will receive tax benefits, child tax credits, and stimulus checks after new legislation was approved that will go into effect with Fiscal Year 2026. It is a financial support package for middle-class family members struggling with inflation and rising prices of products and services.
New York State Governor Kathy Hochul signed fiscal measures within the Fiscal Year 2026 Budget aimed at reducing economic burdens in New York.
Expansion of the child tax credit for eligible American families
Actions include expansion of the Child Tax Credit, historic tax reductions, inflation rebates and universal access to free school meals. According to estimates, families of five could receive up to $5,000 in annual relief.
“The cost of living is still very high, so I promised to give them more money, and we did,” Hochul said. The policies seek to mitigate the impact of inflation on food, education and basic expenses. The funds will come from state surpluses tied to increased tax collections.
The Child Tax Credit will triple in 2025, benefiting 1.6 million families across the state. Families with children under four years old will receive up to $1,000 a year for each child, while those with children between four and sixteen years old will receive up to $500 per child.
New tax reductions applied: More money in your pocket
This reform eliminates previous restrictions and will allow households with moderate incomes to access the benefit. Thanks to this expansion, an estimated 187,000 additional children will be supported, reducing child poverty by 8.2%. If combined with child care subsidies, the impact could reach a reduction of 17.7%.
Even families with annual incomes of up to $170,000—who were previously excluded—will now be able to receive up to $500 per child. For example, a family of four earning $110,000 a year would receive a total of $1,500, which is almost $1,000 more than in previous years.
More than 75% of taxpayers will see a reduction in their state taxes, resulting in $1 billion in annual relief. These savings will benefit households with joint incomes of up to $323,000, positively impacting approximately 8.3 million people. With this measure, tax rates will reach their lowest level in the last 70 years.
Your payroll income won’t be chopped anymore
Starting in 2026, 80% of workers will notice a decrease in payroll withholdings. Once the reform is fully implemented, three out of four taxpayers will save several hundred dollars a year.
The reform is primarily aimed at benefiting the middle class, which has suffered sharp increases in housing, health care and transportation costs. No changes will be applied to taxes on the highest incomes, since the focus will be on strengthening the purchasing power of the most vulnerable sectors.
New York State will distribute $2 billion in inflation rebates, benefiting more than 8 million households. The amounts will vary depending on each taxpayer’s income: couples filing jointly and earning up to $150,000 will get $400, while those with income between $150,000 and $300,000 will receive $300. In the case of individual filers, payments will be $200 or $150, depending on their economic level.
Refunds will be issued automatically at the end of 2026, without the need to submit additional forms. It will only be necessary to have filed the tax return and not appear as a dependent on another person’s return.