Mayor Bloomberg is planning to unveil a sweeping $1 billion tax cut package today in his State of the City address that would reduce property taxes, eliminate the city sales tax on clothing and footwear, and slash some business taxes.

The proposal, disclosed yesterday by senior officials in the Bloomberg administration, includes a one-year property tax reduction that is expected to decrease New Yorkers’ bills by about 5% across the board. The reduction comes about four years after Mr. Bloomberg pushed through an 18.5% property tax increase to deal with the economic downturn that followed the World Trade Center attacks.

Mr. Bloomberg’s plan also includes eliminating the city’s 4% portion of the sales tax on clothing and shoes, which currently applies to items that cost $110 and more. In addition, it includes a combined $140 million in tax relief next year for unincorporated businesses and for other corporations.

The move to reduce taxes comes as the city’s economy is booming, defying the expectations of economists.

In November, City Hall’s budget office said it expected to end the year with a $1.9 billion surplus. The new surplus projections, to be made public next week when Mr. Bloomberg unveils his next budget, are expected to be even higher than that.

“He is going to announce that we have more revenues than previously forecasted,” a senior Bloomberg official said yesterday. “As opposed to increasing the size of government, the mayor believes that a good portion of the surplus revenues should go back into the hands of the taxpayers of New York City.”

The mayor’s proposals — which were embargoed until this morning and released to reporters on the condition that nobody would be called to comment on them until today — will likely come as a surprise to outside budget analysts. As recently as last week, Mr. Bloomberg suggested that he had no plans to cut taxes for the coming year. Last year, he resisted pressure to cut taxes despite recording a $3.3 billion surplus. Instead, he chose to create a $2 billion rainy day fund to pay for future health costs for city retirees, to pay down city debt, and to get the city’s long-term fiscal situation in order.

Bloomberg administration officials declined to say how much more revenue the mayor would direct toward those structural imbalances for the next fiscal year, 2008. Outside sources have suggested the surplus will blow past the $2 billion mark this year.

Mr. Bloomberg’s property tax reduction, which at $750 million makes up the largest chunk of the $1 billion plan, is the only item that does not require approval in Albany, although it must go through the City Council. City Hall officials stressed that it was a one-year reduction. They said they were hopeful it could be extended beyond the year, but that it would depend on the city’s economic outlook. At this point, there are still budget deficits in near future.

The property tax reduction seems to satisfy a requirement Albany set a few years ago. State lawmakers said the city needed to reduce its overall property tax rates if it wanted approval to extend the $400 property tax rebate for this coming year. The mayor is planning to ask for a renewal of that rebate.

The business tax changes the mayor is proposing today, valued at $140 million for the next fiscal year, are designed to reduce some of double taxation certain business owners face when they have to pay taxes on their business income and then again on their personal income.

The changes, administration officials said, will bring the city in closer alignment with state and federal tax structures for unincorporated businesses such as partnerships, limited liability corporations, and the self-employed.

The proposed changes to the unincorporated business tax, which brings in $1.5 billion annually for the city, include increasing tax deductions the businesses can claim for each partner to $10,000 from $5,000.

They also include increasing the tax credit business owners can take against their personal income tax and creating a tax credit for owners of S-Corporations.

The proposed changes to the general corporation tax include phasing out half of the tax rate corporations pay on so-called income-plus-compensation and creating a tax exemption for companies with revenues of less than $250,000.

The tax package will likely be met with opposition from those who would rather see the city increase government programs, and praise from those who have been championing tax cuts since the economy has been surging.

The cuts, however, will be just a small part of the city’s budget, which last year came to $55.5 billion.

Today’s speech, to be delivered in downtown Brooklyn, is also likely to give New Yorkers a glimpse into what Mr. Bloomberg hopes to accomplish in his final three years in office.

For weeks, speculation has been swirling about the education proposals Mr. Bloomberg is planning to announce in this speech. Some are expecting more so-called empowerment schools and more farming out of public education services to private companies and consultants.

His speech last year outlined a laundry list of proposals, such as creating programs to reduce poverty — which are in the works now — and having city employees kick in a portion of their health care costs, which has seen no significant progress yet.