Legislators, Groups Urge End to NY Tax Breaks for Trump Opportunity Zones

Legislators and groups today are urging New York State to end its tax break for Trump’s Opportunity Zone program by passing S3340 (Gianaris) / A3246 (Dinowitz) in the state budget. If the state does not end the tax break, it will cost New York up to $424 million a year – for investments that often are out of state. With the state facing huge budget deficits in the coming years, it is considering ending the program to improve its fiscal situation.

Because New York State and New York City mirror the federal tax codes, the state and city automatically allow super-wealthy investors to deduct federal Opportunity Zone (OZ) investments anywhere in the country. 

While the Opportunity Zone program has attracted media attention for giving tax breaks to superyacht marinas and high-end apartment buildings with pet spas, Reinvent Albany’s report, “Guns, Oil, and Crypto” found OZ investments in guns, oil, and crypto. Under the OZ program, capital gains from, for example, an investment in a gun megaseller in Florida are not taxed by New York. This essentially means New York is subsidizing that wealthy gun investor instead of collecting taxes that could go to clean water or affordable housing in New York.

Because the Trump administration made the program permanent under last year’s federal budget bill, the state will now be funding upscale condos in Miami forever – unless it chooses to decouple from the federal tax code. 

View Reinvent Albany’s report “Guns, Oil, and Crypto.” 

“New York’s Opportunity Zone program was intended to help economically distressed areas but has been abused to grant tax breaks to already overdeveloped neighborhoods,” said Senate Deputy Leader Michael Gianaris. “This giveaway to wealthy investors does too little to help communities in need when we need to prioritize affordability for New Yorkers.”

“This bill is about making sure our tax policies work for New Yorkers,” said Assemblymember Jeffrey Dinowitz. “By fully decoupling from the Opportunity Zone capital gains exclusion, New York is closing a loophole that has allowed significant profits to go untaxed at the state and city level. This is a common-sense step to protect public revenue from those able to take advantage of federal incentives. Passing this legislation will strengthen our tax system and ensure that we have adequate resources to pour back into our state budget.”

“The Opportunity Zone program is nothing more than another boondoggle to funnel taxpayer money to wealthy investors, with little-to-no benefit for New York and New Yorkers,” said Senator Liz Krueger. “If we don’t take action now, New York City and New York State are projected to lose nearly half a billion dollars every year to line investors’ pockets and fund sketchy development in other states. It is critical that we finish the job in this year’s budget and fully decouple New York’s tax code from the federal Opportunity Zone program.”

“New York should never be subsidizing investments in out-of-state gun stores, oil wells and crypto-mining, let alone with billion-dollar budget gaps looming,” said Reinvent Albany Senior Policy Advisor Alex Camarda. “New York should completely decouple from this Trump tax boondoggle and use the revenue to fund programs New Yorkers care about like public transit, clean water, and education.”

“We have been arguing for years that New York State should fully decouple from the Trump Opportunity Zone tax scheme,” said New Yorkers for Fiscal Fairness Executive Director Ron Deutsch. “We simply can’t afford to allow the wealthy to shield themselves from taxation while sending our tax dollars to other states for dubious ventures with no public benefit. We should be keeping these dollars in New York to help address our out year budget gaps and to support programs and services the federal government has slashed.”

“New York should not be sending hundreds of millions of dollars out the door each year to subsidize tax breaks that do nothing for our state,” said Mary E. Sullivan, President of the Civil Service Employees Association. “Rejecting these tax breaks is a common-sense step to protect New York’s revenue, keep those dollars here at home, and ensure they are available to support the public services and investments New Yorkers rely on every day, not another giveaway to wealthy investors.”

“The misuse of Opportunity Zone tax incentives is not just a breach of the public trust, but also of the moral responsibility and obligation that our government has to New York State residents,” said Rashida Tyler, Acting Executive Director of the NYS Council of Churches. “Public dollars must serve the common good, not subsidize private gain at the expense of our most vulnerable neighbors. The NYS Council of Churches supports fully decoupling New York from the federal Opportunity Zone tax code. When we find abuses such as this, elected officials must take action to ensure public dollars and resources are properly stewarded and utilized for the public good.”

We live in one of the wealthiest states in the nation,” said Marina Marcou-O’Malley, Co-Executive Director, Alliance for Quality Education. “We know that New York can have truly universal child care: a system that meets the needs of all families and pays educators thriving wages. We can have fully funded schools, affordable housing, health care and more. If our state leaders want New York State to be a place where families want to be, we need to put our money where our mouth is, and stop providing nearly half a billion in corporate handouts to the ultra wealthy. Without investing in the workforce, universal child care becomes nothing more than a sound bite.”

“New Yorkers should not be subsidizing a tax giveaway that enriches wealthy investors while families struggle with housing, healthcare, and childcare costs,” said Rebecca Garrard, Co-Executive Director at Citizen Action of New York. “Trump-era Opportunity Zone tax breaks have produced windfalls for developers, not real opportunity for our communities. It’s time to end these loopholes and invest in what New Yorkers actually need to thrive.”

Opportunity Zones Explainer
The Trump Opportunity Zones program was created in 2019. It enables individual and corporate investors to reinvest capital gains in Opportunity Funds that invest in businesses, real estate and other projects across 9,000 opportunity zones in the United States. Investors receive a tax deduction for their capital gains on investments. If investors hold their investment for ten years or longer they can write off the entirety of their capital gains, meaning the state will start to lose revenue from the program in 2029. Previously, the state decoupled from another benefit of the program that allowed a capital gains tax deduction of 10 or 15% for cashing out of an investment after 5 or 7 years, respectively.