Gothamist
A non-profit newsroom, powered by WNYC.
Gothamist
Listen Live
News
Should NY give tax breaks to start-ups? Legislature resists Gov. Hochul’s tax-free plan
By
Jimmy Vielkind
Published Mar 21, 2025
Share
FacebookTwitterRedditEmail
Never miss a story
Email address
By submitting your information, you're agreeing to receive communications from New York Public Radio in accordance with our Terms .
Mike Groll/Office of Governor Kathy Hochul
By
Jimmy Vielkind
Published Mar 21, 2025
Share
FacebookTwitterRedditEmail
We rely on your support to make local news available to all
Make your contribution now and help Gothamist thrive in 2026. Donate today
Gothamist is funded by sponsors and member donations
Gov. Kathy Hochul is pitching a slimmed-down program to give tax breaks to start-up companies, but her idea has been received with skepticism in Albany, where some critics say it’s too similar to an ill-fated program started by former Gov. Andrew Cuomo.
Cuomo’s Start-Up New York program created a network of tax-free zones tied to colleges and universities. Starting in 2014, it has shielded approved businesses in designated areas from property, sales, corporate and income taxes for 10 years – and now costs the state about $17 million in revenue annually.
Now that Start-Up is expiring, Hochul is proposing a narrower program called Catalist. It would start with the state’s network of business incubators, which could nominate companies they’ve helped to receive five years of income tax breaks. The number of participants is capped, but they could be located anywhere in the state.
Catalist was internally nicknamed “Start-Up Light,” according to an administration source who was not authorized to discuss the name publicly. Lawmakers have also pointed out the similarities between the programs – and that’s proven to be a political liability. Both houses of the Legislature omitted Hochul’s idea from their budget proposals, signaling it’s in trouble in negotiations over the $252 billion spending plan.
Assemblymember Al Stirpe, a Democrat from Syracuse who chairs the chamber’s economic development committee, said he didn’t think Start-Up had much of an impact and was oversold by an extensive ad campaign. He said he would rather focus money and attention on other types of economic development incentives rather than enact Catalist.
“It's an odd type of incentive compared to other incentives we give people,” Stirpe said. “Reducing property taxes and giving them grants to fund specific things that they're going to be developing – those things seem to work fine, and we don't know why we need to have this little odd cousin on the side.”
In 2014, Cuomo said Start-Up New York was a game-changer that would create as many as 10,000 jobs. It created 76 jobs in its first year of operation, according to official progress reports, and 332 jobs in its second year.
The figures eventually began to increase, but still fell far short of promises: According to a database maintained by New York’s economic development agency, 2024 ended with 276 companies in the program that had promised to create more than 3,000 jobs. They actually created 838.
Catalist offers a more demure pitch – and officials at Empire State Development, which oversees New York’s economic development programs, were quick to differentiate between the two programs. ESD President Hope Knight has pitched Catalist to chambers of commerce around the state as an important tool for early-stage companies trying to attract top talent.
“Our innovation companies are very important to New York,” Knight said during a hearing last month. “We believe that by providing this personal income tax exemption, these companies are going to be able to hire the talent that they need and we can root them here in New York as they grow, instead of them moving someplace else.”
The Start-Up program was also controversial because of how it was promoted. The state spent $45.1 million between October 2013 and October 2014 – as Cuomo ran for a second term – on television ads that encouraged businesses to apply for the program, according to a subsequent audit. ESD received more than 18,000 applications during the same period, but only about 10% were eligible for the program and just 41 enrolled, the audit found. That translated to $25,000 of advertising for each promised job.
Cuomo justified the ads by saying that the program – and its extensive marketing – were important for changing public perception about the business climate in the state. But over time he turned his focus to other areas. A board tasked with approving new Start-Up zones last met in 2017.
The Department of Taxation and Finance estimates that Start-Up now costs the state around $17 million in lost revenue each year. A state-commissioned study released in 2023 found that for every dollar expended on Start-Up, it returned $1.58 of direct tax benefits.
John Kaehny, executive director of the government watchdog Reinvent Albany, said he was glad Start-Up NY is expiring. He said other factors, including access to the workforce, are bigger factors in business-location decisions than tax breaks.
“They lost the thread on the program, and good riddance,” he said. “Generally, we are extremely skeptical of tax breaks.”
A few Start-Up zones have closed down, but some remain active – including BioLabs New York in Lower Manhattan. Several companies that utilize that incubator space told legislators that the tax breaks led them to choose New York over cities like Boston.
One is Lime Therapeutics, which is researching lipid processing and developing drugs that could one day treat cancer or cardiometabolic diseases. CEO Shardule Shah said Start-Up has made it easier to recruit employees by offering higher wages.
“It became apparent to me that this would be an instrumental benefit in how we could grow the company,” he said.
Marc Alessi, a former state lawmaker who now leads an association of the state’s business incubators, said he doesn’t like that Catalist has a limit on how many businesses can participate. But he called it “a logical step” for helping new companies.
“Although Start-Up New York was bureaucratic and could have been a whole lot better, when done right it was effective. And we should learn from that and improve upon that, not just let them throw the baby out with the bathwater,” he said.
Tagged
Kathy Hochul
new york state
politcs
Jimmy Vielkind
Jimmy Vielkind covers how state government and politics affect people throughout New York. He has covered Albany since 2008, most recently as a reporter for The Wall Street Journal. Jimmy led a team of reporters that won a New York Press Club award for coverage of Andrew Cuomo’s downfall and was on a team that won a Gerald Loeb Award for coverage of Amazon’s HQ2 process. A native of the Capitol Region, Jimmy has two degrees in urban planning. His position is funded by a grant from the Corporation for Public Broadcasting. Reach Jimmy at [email protected].
Read more
Gothamist is funded by sponsors and member donations
Gothamist is funded by sponsors and member donations
MORE news
NJ Gov. Sherrill: Election is secure, noncitizens taken off voter rolls
The governor made the comments in the October edition of "Ask Governor Sherrill" on WNYC.
By
Michael Sol Warren
Published Oct 27, 2026 at 7:42 p.m. ET
Modified Oct 27, 2026 at 11:14 p.m. ET
Ex-NYPD officer again faces murder charge in George Washington Bridge shooting
The charge against him was upgraded following an “extensive investigation,” the DA’s office said.
By
Samantha Max
News
Ex-NYPD officer again faces murder charge in George Washington Bridge shooting
The charge against him was upgraded following an “extensive investigation,” the DA’s office said.
By
Samantha Max
Former NYC buildings boss helped reopen mayor's favored restaurant despite health violations
By
David Brand
1 killed, 4 others injured at Elizabeth, NJ vigil shooting
By
Catalina Gonella
Police arrest man in Queens stabbings that ended with officer shooting woman
By
Ryan Kost
Never miss a story
Catch up on the most important headlines with a roundup of essential NYC stories, delivered to your inbox daily.
Sign upEmail address
By submitting your information, you're agreeing to receive communications from New York Public Radio in accordance with our Terms .