New York State's STAR Program has Changed

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New York's School Tax Relief (STAR) program provides eligible homeowners with relief on property taxes for their primary residence. It was enacted in 1997, but new state law makes important changes homeowners should know. Many recently received a letter from New York. Some need to take action to keep or maximize their benefit under the new rules. STAR relief is now received in one of two ways - the original STAR exemption or the newer STAR credit.

 

The STAR Exemption

The STAR exemption program reduces school tax bills before they are paid. It has long been available to registrants with income below $500,000 (income here means Adjusted Gross Income on the homeowner's federal tax return, less taxable IRA distributions). However, this program is being phased out and is closed to new applicants. What's more, eligibility has changed, and homeowners with income over $250,000 no longer qualify for the STAR exemption. They must now register for the STAR credit.

 

Existing STAR exemption enrollees with income under $250,000 may upgrade from the exemption to the STAR credit, which usually offers greater benefits. While the STAR credit savings can grow by as much as 2% from year to year, the exemption amount will never change. Homeowners can make the switch by registering here.

 

The STAR Credit

Created in 2016, the STAR credit relief program does not reduce school tax bills directly. Program registrants pay the full tax to the school district but will receive a check by mail from New York State before the tax bill is due. The program is open to any eligible homeowner whose income is $500,000 or less. New York automatically registered all qualifying homeowners with earnings over $250,000 for the STAR credit. Most received a confirmation letter from the state, and no action is necessary.

 

However, some of those homeowners must provide additional information before the state will issue them a check for their STAR credit. Their request letter explains how they can update their registration in a short online process. The letter lists information that homeowners will need to have available to complete the online process.

 

Enhanced STAR Helps Low Income Seniors

The Enhanced STAR program is available when at least one spouse in the home is age 65 or older. Enhanced STAR more than doubles the tax relief benefit when the combined income of the owner and spouse is $86,300 or less. Seniors with lower incomes (these vary by locale - New York City's maximum is $50,000) may also be eligible for New York's separate senior citizen exemption. 

 

Get with the Program!

Recent New York homeowners, or those who never applied for the STAR benefit for their current residence, may save hundreds of dollars each year by registering for the STAR credit. Once enrolled, registrants receive the benefit automatically every year they continue to own and occupy their home.

 

Contact your LM Cohen professional if you have questions about the STAR program or how to register for the STAR credit. All our prior State Tax Alerts, and many topics about the Tax Cuts and Jobs Act, are available on the Updates page of our website

 

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