Tax Credits for Working Families

New York

Earned Income Tax Credit

**New York is one of only four states that regulates paid tax preparers.

Income Tax Rate: Graduated, 4-6.86 percent

State EITC: Yes

Refundable: Yes

Enacted: 1994

Formula: 30 percent of federal EITC

Notes/News: The New York State EITC has strong bipartisan support. In tax year 2007, almost 1.5 million claimants of the NYS EITC received more than $860 million in state tax credits. New York State now also provides a supplement to the federal EITC for non-custodial parents who are paying child support, known as the Noncustodial parent earned income credit. Non-custodial parents can claim this credit if they have an order in effect for at least one-half of the tax year requiring them to make child support payments payable through a support collection unit, and have paid at least the court-ordered amount of child support during the tax year. They can claim the greater of 20% of the federal EIC that they could have claimed if the noncustodial child met the qualifying child definition or 2.5 times the federal EIC that they could have claimed if they met the eligibility requirements, computed as if they had no qualifying children. The credit is refundable. An Urban Institute study of the credit found that participants worked more, earned more, and paid more child support. Unless the New York legislature acts, 2013 will be the last year that this credit was available (for the 2012 tax year).

In addition to the state credit, New York City offers its own EITC which is calculated as 5 percent of the federal credit. In TY 2007, 865,341 families claimed $87 million from the New York City EITC. New York State also provides a household credit between $3 and $45 to filers who cannot be claimed as a dependent on another taxpayer’s federal return and whose adjusted gross income (AGI) is not over $32,000 ($28,000 if filing as single). New York City also provides a household credit between $5 and $30  to filers who cannot be claimed as a dependent on another taxpayer’s federal return and whose AGI is not over $22,500 ($12,500 if filing as single).

In May 2013, New York City Mayor Bloomberg announced a pilot program to expand the city’s EITC for low-income single workers without dependent children, with the goal of increasing employment and earnings.

In June 2014, The New York City Council called upon Congress to increase the federal EITC for childless workers, while also calling upon the New York State Legislature to increase the City’s EITC from 5 to 10 percent of the federal credit.

Reports/Materials: Fighting Poverty and Expanding Opportunity: The Earned Income Tax Credit in NYC, Bureaus of Policy and Budget, May 2014

MAYOR BLOOMBERG AND DEPUTY MAYOR GIBBS ANNOUNCE PILOT EXPANSION OF EARNED INCOME TAX CREDIT AS NEW ANTIPOVERTY INITIATIVE, The City of New York, May 2013

New York State & Local Taxes, from Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, Institute on Taxation and Economic Policy, January 2013

Making Work Pay in New York: The Earned Income Tax Credit, Russell Sykes, Empire Center for New York State Policy, April 2012

Strengthening Families Through Stronger Fathers Initiative: Summary of Impact Findings, Elaine Sorensen and Kye Lippold,
Urban Institute, October 2012

Earned Income Tax Credit: Analysis of Credit Claims for 2009, New York State Department of Taxation and Finance, Office of Tax Policy Analysis, November 2011

Earned Income Tax Credit Analysis of Claims for 2007, Office of Tax Policy Analysis, December 2009

New York: State and Local Taxes in 2007, Institute on Taxation and Economic Policy, November 2009

Outreach: The Campaign to Expand the State Earned Income Tax Credit (EITC) is an affiliation of more than 20 organizations statewide including SCAA, the Business Council of NYS, the United Way of NYS, Citizens Committee for Children, AFL-CIO, National Federation of Independent Business, and the UJA-Federation.

Child Tax Credit

State Credit: Yes

Refundable: Yes

Eligibility: Same as federal.

Formula: 33 percent of the filer’s federal child credit or $100 per qualifying child. Filers with income above $75,000 ($110,000 for couples) must use the percentage formula.

Notes/News: New York’s child tax credit is known as the Empire State Child Credit and is up to $330 per child. In tax year 2007, 1,685,114 New Yorkers claimed $660 million in Child Tax Credits. On March 21, 2013, Governor Cuomo announced that as part of the budget agreement reached by the Governor, the Senate, and the Assembly, families with incomes between $40,000 and $300,000 will be eligible to receive a new child tax credit of $350 per-year for three years. The credit, which will be delivered as a check, will begin in 2014. More than 1 million middle class families across New York State will benefit.

Child and Dependent Care Tax Credit

State Credit: Yes

Refundable: Yes (except for out of state filers)

Eligibility: Same as federal

Formula: The credit is calculated based on the filer’s income. Filers with New York AGI below $25,000 (including negative income) may claim up to 110 percent of the federal child and dependent care credit. The percentage decreases as income increases beyond $25,000. Filers earning NY AGI $25,001-$39,999 may claim between 109 and 100 percent of the federal credit. Filers earning NY AGI $50,001-$64,999 may claim 100 percent of the federal credit. Filers earning NY AGI $65,000 or more may claim 20 percent of the federal credit. AThe exact percentages are in the table on page six of Form IT-216-I

Notes/News: In 2007, New York filers claimed $332.3 million worth of child and dependent care credits.

Reports/Materials: Wrenching Choices for New York City’s Working Families: Child Care Funding Slashed as Need Grows, Fiscal Policy Institute, May 2011

Property Tax Circuit Breaker

Circuit Breaker: Yes

Refundable: Yes

Eligibility: The credit is available to homeowners and renters. Property taxes for renters are calculated as 25 percent of rent paid, not including utilities. Filers must have a household income below $18,000 and live in New York for the entire year including at least six months in one residence. Filers are ineligible if they own property worth more than $85,000, if they can be claimed as a dependent or if they live in a building not subject to property tax.

Formula: The credit is 50 percent of the amount by which property taxes exceed a filer’s overload limit. The circuit breaker limit is calculated according to the following chart:

Household Income Overload Limit
$3,000 3.5 percent
$3,001-$5,000 4 percent
$5,001-$7,000 4.5 percent
$7,001-$9,000 5 percent
$9,001-$11,000 5.5 percent
$11,001-$14,000 6 percent
$14,001-$18,000 6.5 percent

News/Notes: On June 24, the New York State Legislature passed Governor Andrew Cuomo’s plan for a very tight statewide cap on property tax increases for towns and cities outside of New York City. A strong coalition of advocates had been trying to convert the cap to a Circuit Breaker, a more cost-effective approach that would target relief to families whose property taxes are too high a share of their income. Unfortunately, the cap as enacted will not provide effective relief for the hundreds of thousands of low- and middle-income families in New York State who are already paying an excessive share of their income in property taxes on their primary residences, and are most in danger of being forced out of their homes.

At the beginning of the 2014 legislative session, Gov. Cuomo proposed a property tax credit for  renters making up to $100,000 and a conditional two-year freeze on homeowner’s property taxes that would transition into a property tax circuit breaker system as part of a $2.2 billion tax relief plan.

In March, Assembly Speaker Sheldon Silver said their budget proposal will include a property tax circuit breaker instead of the rebate program sought by Gov. Cuomo.

The budget enacted in New York State in April 2014 includes a property tax circuit breaker for New York City homeowners and a credit for renters that is called a property tax circuit breaker but does not meet the definition of a circuit breaker because it does  not depend on amount of property tax (included in rent) compared to income.  The details are not yet clear, but the maximum credit will be $150 and a $200,000 income cap is set for eligibility.

Reports/Materials: Comparison of the Final 2014-2015 New York State Revenue Bill to the earlier Executive, Assembly and Senate Budget Proposals, Fiscal Policy Institute, March 2014

2010 Residential Property Tax Comparison: New York, New Jersey, and Connecticut, U.S. Census, September 2011

Proposed Cap Does Not Address New York’s Property Tax “Problem”, Fiscal Policy Institute, June 2011

Incorrect Diagnosis of New York’s Property Tax “Problem” Will Lead to a Remedy That Is Likely to Do More Harm Than Good, Frank Mauro, Fiscal Policy Institute, June 2011

Short Term Property Tax Relief and Long Term Tax Reform: An Omnibus Approach, Testimony of Frank Mauro Before the Assembly Standing Committees on Ways and Means, Education, Real Property Taxation, Local Government and Cities at the Public Hearing on Cap on Real Property Taxes, March 1, 2011

The Omnibus Tax Reform Bill – Restoring Fairness to Taxation Short Term Relief and Long Term Solutions, Omnibus Consortium

New York’s Effort to Provide Targeted Property Tax Relief, Daphne A Kenyon, Adam H. Langley and Bethany P. Paquin

Property Tax Relief: The Case for Circuit Breakers, Lincoln Institute of Land Policy, April 2010

Circuit Breaker Calculator: What Does All This ADD UP to?, NY State Property Tax Reform Coalition

Press Release: Omnibus Consortium on Senate Property Tax Proposal Supports Stronger Circuit Breaker – Says No to Caps, Omnibus Consortium, March 2010

TREND NY Poll Says New Yorkers Prefer Circuit Breaker over Cap, A Better Choice for New York, June 2008

The Property Tax Circuit Breaker: Getting to the root of the problem, New Yorkers for Fiscal Fairness & the Fiscal Policy Insitute (FPI), 2007