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What happened?
The New York City Council enacted Int. No. 972 on August 18, amending Section 11-1706 of the Administrative Code to reduce the Unincorporated Business Tax (UBT) credit available to city residents with taxable income of $1 million or more. Under the new provision, the credit phases down from 23% to 15% for city residents with taxable incomes between $1 million and $1.25 million, and is capped at 15% above $1.25 million. The law is retroactive to January 1, 2026.
Why is it relevant?
Under prior law, all city resident taxpayers with city taxable income of $142,000 or more received a flat 23% UBT credit regardless of income level. The new law effectively increases the city personal income tax burden on high-earning pass-through business owners by reducing that credit for those with taxable income above $1 million. Because the change is retroactive to January 1, 2026, affected taxpayers may need to adjust estimated payments already made.
Actions to consider
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