The New York Senate voted this week to decouple the state’s capital gains rate from the Opportunity Zone incentive, a move that has been widely anticipated since S.B. 6800 was introduced last year. The measure passed the Senate 44-17 without debate.

If enacted, this legislation essentially means that investors will not be able to eliminate New York state capital gains on Opportunity Zone investments. The legislation has no impact on the elimination of federal capital gains taxes.

Most states either conform fully with the federal Opportunity Zone tax incentive or do not have a capital gains tax. States that do not conform include California (13.3% top marginal capital gains rate), Massachusetts (5%), Mississippi (5%), and North Carolina (4.99%).