Helm "was a true inspiration to not only millions of fans, but our community," Democratic Assemblyman Kevin Cahill of Kingston said in a statement Friday.
The bill, which still needs a state Senate sponsor, would designate state Route 375 as "Levon Helm Memorial Boulevard."
The rambling two-lane highway connects state Route 28 from the Hudson Valley city of Kingston to Woodstock's state Route 212.
"We're honored," Barbara O'Brien, manager of Levon Helm Studios, told the Daily Freeman of Kingston. "I travel that road seven days a week, and I know I'll feel like Levon's in the car with me.
"I can just see his ear-to-ear grin," she said.
Helm, who died April 29, 2012, at age 71 from complications of cancer, lived in Woodstock. A heavy smoker, he was diagnosed with throat cancer in the late 1990s.
In 2005 Helm turned his barn -- which had been a recording studio since 1975 -- into the residence of a down-home, eclectic concert series called the Midnight Ramble, which led to tours and Grammy Award-winning albums.
"In a world that often compromised integrity, Levon Helm cultivated the tradition of professionalism with a deep respect for his craft and remained refreshingly genuine throughout his life," Cahill said.