Governor Hochul Unveils $260 Billion FY2027 New York State Budget with No Income Tax Hikes

New York Governor Kathy Hochul unveiled her $260 billion Executive Budget for Fiscal Year 2027 on Tuesday, January 20, 2026, outlining a comprehensive plan focused on enhancing affordability, strengthening public services, and fostering economic development across the state. A central tenet of the proposal is the commitment to no new income tax increases for New Yorkers.

Key Investments in Child Care and Education

A significant portion of the budget is dedicated to supporting working families, with a substantial increase in funding for child care. The plan allocates an additional $4.5 billion for child care and Pre-K services statewide, including $1.7 billion in new investments. This initiative aims to expand access and eligibility, with proposals such as:

• $1.6 billion for Universal Pre-K Aid in School Year 2027.
• $3.2 billion in childcare vouchers statewide to address waitlists.
• $500 million over two years for New York City's 2-Care program.
• Pilot child care programs in Broome, Dutchess, and Monroe Counties.

In education, the budget proposes the highest level of State Aid to Schools in New York's history and continues the Universal Free School Meals program with an allocation of $395 million. Furthermore, $90 million is earmarked to maintain a tuition freeze for resident undergraduate students at SUNY and CUNY four-year colleges.

Fiscal Responsibility and Economic Development

Governor Hochul's budget underscores fiscal prudence, projecting state revenue collection to increase by 9.9 percent and all funds spending to rise by 0.7 percent. The state maintains over $14.6 billion in reserves, described as a 'rainy day' fund, and has preserved its AA+ credit rating, the best since 1972. The budget also includes measures to stimulate economic growth and improve infrastructure.

• The top corporate franchise tax rate of 7.25%, which was set to expire, will be extended for three years through 2029.
• Taxes on tipped wages, up to $25,000 per year, are proposed for elimination.
• Investments include a $68.4 billion allocation for the MTA's 2025-2029 Capital Plan.
• A $300 million plan over three years aims to establish a Quantum Research and Innovation Hub at Stony Brook University.

Healthcare and Public Safety Initiatives

The Executive Budget also prioritizes healthcare and public safety. It includes historic investments in healthcare, committing to protect access to health care, reproductive health care, and mental health care. Medicaid spending is proposed to increase from $34.3 billion to $38.2 billion, alongside a $1 billion increase in the Safety Net Transformation Program to support hospitals.

For public safety, the budget continues investments to combat gun violence, subway crime, and hate crimes, with $352 million allocated for community and law enforcement programs to prevent and reduce gun violence. Governor Hochul stated, 'Every dollar in this year's budget is being put to work to fight for families.' The budget aims to deliver essential services to New Yorkers while preparing for potential economic uncertainties.