ALBANY – New York has created a new property tax credit for homeowners who make less than $250,000 a year, with about a quarter of the state’s estimated 4.5 million owner-occupied homes expected to qualify.
The new tax credit, included in the state’s $212 billion budget approved this week by the Legislature and Gov. Andrew Cuomo, will apply to eligible homeowners whose property tax bill exceeds 6% of their annual income, with some exceptions.
The amount of the credit will be between $250 and $350, and it will be available through 2023. All told, it’s expected to result in $383 million in property tax savings each year, according to the state Division of the Budget.
Wondering if you qualify and how much your credit will be? Here’s what we know about how the new tax credit will work.
Who qualifies for New York’s new property tax credit?
In general, homeowners who make less than $250,000 annually and pay more than 6% of their income toward property taxes qualify for the new credit.
A homeowner seeking the credit must live in their New York home for at least 183 days out of the calendar year, similar to the STAR program. That means you can only claim the credit for one property. (This new credit is on top of the STAR program, if you were wondering.)
There is another quirk, however, that will disqualify you if your expected tax credit is below $250. More on that in a bit.
How many people will qualify?
The state is estimated about 1.1 million homeowners will qualify. That’s about a quarter of the roughly 4.5 million owner-occupied homes in New York, according to Census Bureau estimates.
The average credit for those who qualify is estimated to be $340.
How much will my tax credit be if I make less than $75,000?
Here’s how you calculate the amount of your tax credit.
If your household makes less than $75,000 a year, your credit will be 14% of the amount of “excess” property tax paid, which the program counts as anything above 6% of the homeowners’ income.
Here’s an example, as provided by the state Division of the Budget:
- Say someone makes $50,000 this year and pays $5,000 in property tax.
- 6% of $50,000 is $3,000, which means the homeowner paid $2,000 in “excess” property tax.
- 14% of $2,000 is $280, which means the homeowner would get a credit for $280.
Under the new program, the maximum credit is $350 a year. If the calculation for the credit exceeds $350, the homeowner would only get $350.
The other wrinkle: If the calculation turns up a credit that works out to less than $250, the homeowner won’t get a credit at all. (The law doesn’t make entirely clear why that is.)
“The calculation of this credit is capped at $350 per STAR-eligible household, while also utilizing a $250 credit minimum to further target homeowners impacted the most by high property taxes,” Cuomo’s office wrote in a news release Tuesday.
How much will my tax credit be if I make more than $75,000 but less than $250,000?
It gets more complicated if you are a higher earner. Way more complicated. There’s a two-pronged calculation to determine your credit.
The bottom line: Your credit will be a little less, percentage-wise.
If you make between $75,000 and $150,000, take the amount of income in excess of $75,000 and divide it by $75,000. Then take that number and multiply it by 5. Then take that number and subtract it from 14. Whatever that number is the percentage of “excess” property tax that will be equal to your credit.
An example: Someone makes $100,000 and pays $10,000 in income tax. The “excess” property tax (the amount over 6% of income) is $4,000. Based on the calculation about, the percentage of excess property tax eligible for the credit would be 12.33%, which works out to about $493. Since that number is greater than $350, the tax credit would be $350 — the maximum allowed.
It’s a similar calculation for those making between $150,000 and $250,000, except it is based on income that exceeds $150,000 (instead of $75,000) and is divided by $100,000 (instead of $75,000). That number is multiplied by 6 (instead of 5) and subtracted from 9 (instead of 14).
Confused? It’s OK. It’s confusing. Consider consulting with an accountant when you file your taxes next year. Plus, the major tax-filing software programs and websites should account for it.
How do I claim the new property tax credit?
Unlike the STAR program, which results in a check sent to homeowners or an immediate reduction on their property tax bill, this credit will be claimed when you file your income tax return.
The credit goes into place this year, which means you can claim it when you file your taxes in 2022. It will remain in place for the 2022 and 2023 tax years, too, according to the budget.
Jon Campbell is a New York state government reporter for the USA TODAY Network. He can be reached at JCAMPBELL1@Gannett.com or on Twitter at @JonCampbellGAN.
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