Gov. Kathy Hochul (D-N.Y.) just got slapped with a dose of reality. After spending weeks refusing to eliminate state income taxes on tips, New York's embattled governor finally caved Thursday and announced she'll push to scrap state taxes on gratuities. But why? Or more importantly, why now? The answer is obvious.
“As we welcome in the New Year, affordability remains my top priority, and I am doubling down on my commitment to put money back in New Yorkers’ pockets,” Gov. Hochul said in a statement. “Starting today, tax rates for the vast majority of lower and middle-class New Yorkers will be cut, families with children will see a sweeping increase in the child tax credit, and minimum wage workers across the state will see their wages go up.”
And then she tried to take credit for the policy.
“I’m kicking the new year off with a proposal of no state income tax on tips, continuing my efforts to make New York more affordable for hard working New Yorkers.”
Her plan would exempt up to $25,000 in tip income from New York state income tax starting in 2026. Hochul tried to dress it up as some grand affordability initiative, but everyone knows what this really is: a desperate attempt to stop the bleeding after Trump's federal "no tax on tips" policy exposed just how out of touch she has become.
Which brings us back to the key question: why did she flip-flop?
There’s only one explanation. Hochul knows that Donald Trump's no tax on tips policy is popular — heck, even Kamala Harris tried to pitch her own version of it — and someone has to run for reelection this year. Sure, most polls show her comfortably ahead, but when Rep. Elise Stefanik was still in the race, polls showed her ahead of Hochul or virtually tied. In 2022, she won reelection by a relatively small (and uncomfortable) margin against Lee Zeldin, and opposition to a popular policy wasn’t going to do her any favors. Hochul is weaker than many people think; she clearly knows it.
Recommended: Mamdani Goes Full Antisemite on Day One
I’m guessing polling told her that if she didn’t end state taxes on tips to match the federal policy, it would cost her in November. I can tell you one thing: Hochul didn't wake up one morning and suddenly start caring about the financial plight of bartenders and servers. She got dragged kicking and screaming to this position after tipped workers across New York torched her for refusing to follow Trump's lead.
Hochul tried to bury the announcement by releasing it just hours before New York City Mayor Zohran Mamdani's inauguration ceremony. She also threw in additional “affordability” measures, such as a tax cut for middle-class earners and an expansion of the state child tax credit. But nobody's fooled. This is a political Hail Mary from a governor who knows she's in trouble. Trump's policies are resonating with voters, and Hochul just admitted it.
It's not complicated. Trump eliminated federal income taxes on tips, and voters love it. But Democratic governors spent weeks hemming and hawing, trying to balance resisting Trump and appeasing the voters they need to stay in power.
"It seems like the Democratic playbook is that anything that has Donald Trump's name on it, they can't accept it," State Sen. Dean Murray (R-3rd District) observed.
Hochul’s sudden flip-flop on this issue is a telltale sign that she lacks confidence in her reelection prospects. Democratic governors, especially those harboring 2028 ambitions, know that resisting Trump is a litmus test for the party faithful. Hochul is no presidential contender, but she could plausibly land on a future Democratic ticket as a vice-presidential pick; however, she has to win reelection first to make the contenders list, and her position on no tax on tips might have been politically necessary to keep her job. All I know is that she wouldn’t flip-flop on this issue if it weren’t politically necessary.
