New New York Property Tax Credit Offers Relief To Middle Class

NEW YORK, NY — New York's new budget deal includes a new personal income tax credit aimed at middle-class homeowners who pay hefty property taxes.

In New York, that's a lot of people: about one in four of the state's more than 4 million owner-occupied homes will qualify, according to state budget officials.

However, it's not a lot of money — state officials expect that claims will average about $340 — though it is on top of the STAR program.

The credit is capped at $350 per STAR-eligible household. To make sure it goes to homeowners affected the most by high property taxes, there's also a $250 credit minimum.

The credit is limited to homeowners who make less than $250,000 a year and whose total property tax exceeds 6 percent of their income. The formula is on a sliding scale, and also becomes increasingly arcane as the income level rises.

It's easy at $50,000:

• Take a person who earns $50,000 annually and has a property tax bill of $5,000.
• 6 percent of $50,000 is $3,000.
• Subtract that from the total property tax: $2,000 is considered "excess."
• 14 percent of that $2,000 is $280. There's the credit.

Things get more complicated at higher income levels, which covers a lot of homeowners in downstate New York. The median household income in Nassau, Suffolk and Westchester counties is between $90,000 and $105,000. The median property tax in Nassau is $14,872.

Say you have an annual income of $100,000 and you pay $15,000 in property taxes. Six percent of your income is $6,000, so for the purposes of the credit $9,000 in property taxes is considered "excess."

You take the amount of your income in excess of $75,000, divide it by $75,000, multiply it by 5, and subtract the result from 14. Did you get 12.3 percent too? That's the percentage you can apply to the "excess" property tax. So 12.3 percent of $9,000 is — over the cap. Makes you eligible for $350.

If your annual income is between $150,000 and $250,000, the formula changes again.

Say you have an annual income of $180,000 and pay $20,000 in property taxes. The "excess" for the tax credit is $10,800.

Take the amount of your income over $150,000, divide it by $100,000, multiply by 6 and subtract the result from 9. That 7.2 percent you can apply to the "excess" property tax. Over the cap: makes you eligible for a $350 credit.

One hopes that with a household income over the median, you have someone else prepare your taxes.

Homeowners who can claim the new credit will be able to do so for this year, 2022, and 2023.