Personal income tax: Tax expenditure estimates
Personal income tax: Tax expenditure estimates
This section provides revenue estimates of tax expenditures for the 2025 New York State personal income tax. Tax expenditures are first estimated for the 2022 tax year (the latest year for which historical tax data are available) and then projected to the 2025 tax year. This section also provides historical estimates from 2018 through 2022 for comparison. Table 1 lists the income tax provisions for which estimates exist, and the estimates themselves. To provide some perspective, it also shows total personal income tax liability for the 2022 tax year. The data used to generate the estimates do not include late-filed-returns, audited returns, or fiduciary returns because no contemporaneous data exist to make the estimates.
Description of tax
The computation of the New York State personal income tax starts with the federal definition of adjusted gross income as included in the Internal Revenue Code. The Internal Revenue Code permits certain exclusions and adjustments in arriving at federal adjusted gross income. New York allows several subtraction modifications and requires certain addition modifications in arriving at New York adjusted gross income. Taxpayers can then reduce their New York adjusted gross income by subtracting the higher of the New York standard deduction or New York itemized deductions. New York itemized deductions generally conform to federal itemized deductions as they existed prior to enactment of Public Law 115-97; however, certain modifications, such as an add-back for income taxes, apply. In addition, an overall New York State deduction limitation applies to upper-income taxpayers. New York taxpayers may also subtract from New York adjusted gross income a $1,000 exemption for each dependent, not including the taxpayer and spouse. After computing taxable income, taxpayers apply a marginal tax rate schedule to compute their tax before credit amount. Eligible refundable and/or nonrefundable credits are then subtracted to determine final New York liability. The chart below shows the computation from federal adjusted gross income to final New York liability.
Federal adjusted gross income undergoes New York modifications, resulting in New York adjusted gross income. The New York adjusted gross income branches off into standard deduction and itemed deductions. Both paths lead to dependent exemptions. This leads to New York taxable income, which undergoes a tax table computation. The tax table computation results in a tax liability before credits. Refundable and nonrefundable credits are applied, which results in a New York liability after credits.
Major features of the New York State income tax rates since 2012 are as follows:
- In 2012, the top rate was 8.82 percent on taxable incomes over $1,000,000 for single individuals, $1,500,000 for head of household, and $2,000,000 for married couples filing jointly.
- For tax years 2013 through 2017, the tax brackets were indexed by a cost-of-living percentage adjustment. Tax bracket values are no longer indexed after 2017.
- For tax years 2018 through 2023, rate reductions were phased in for middle-class taxpayers. Fully phased in, taxpayers with taxable incomes between $13,900 and $80,650 ($27,900 and $161,550 for joint filers) saw their rates reduced to 5.50 percent and those with taxable incomes between $80,650 and $215,400 ($161,500 and $323,200 for joint filers) saw their rates reduced to 6.00 percent.
- For tax years 2021 through 2027, the top 8.82 marginal tax rate is replaced with three new rates and brackets as follows:
- 9.65 percent on income between $1,077,550 and $5 million ($2,155,350 and $5 million for joint filers),
- 10.30 percent on income between $5 million and $25 million (all filers), and
- 10.90 percent on income over $25 million (all filers)
- For tax years 2028 and after, the top rate reverts to 8.82 percent on income over $1,077,550 ($2,155,350 for joint filers).
- If New York adjusted gross income exceeds $107,650, then taxpayers must also compute a supplemental tax that recaptures the tax benefit that results from income being taxed at less than the top marginal rate.
- Taxpayers may then subtract certain credits in arriving at their actual tax liability.
Many of the effective dates for the income tax items occurred in 1960. The state personal income tax was originally enacted in 1919, but the present system of federal conformity with respect to income and deductions did not begin until 1960. Therefore, the report uses 1960 as the effective date for the provisions existing since the reorganization of the state’s income tax. Many provisions have also been amended since their enactment; however, this report does not provide a detailed legislative history of each item covering the entire intervening time frame.
The descriptive paragraph on each income tax expenditure summarizes the provision as it appears in the Tax Law in effect as of January 1, 2025. It also includes any differences applicable between the 2022 and 2025 tax years. The listing does not include provisions that were repealed or allowed to sunset prior to 2025. Also, only tax credits specific to the personal income tax are described here. Descriptions of tax credits available under multiple tax articles are contained in the Cross-article tax credits section of the report.
Data sources
The major sources of data used in this section include:
- 2022 Personal Income Tax Population Study File—A data file based on 10.7 million personal income tax returns filed with the New York State Department of Taxation and Finance. The file includes micro data pertaining to full-year resident, part-year resident, and nonresident tax returns filed in 2023 for tax year 2022. The file represents the latest settled information as processed by the department’s tax return system and is verified to ensure accuracy and reliability. This data is used in conjunction with a Personal Income Tax Simulation Model, a set of complex computer programs which simulate the various features of the Tax Law and variations thereof for the years being estimated.
- 2022 federal Statistics of Income—An annual statistical report produced by the U.S. Treasury Department. It contains Internal Revenue Service data collected from the federal tax returns filed by New York residents. Verification of the data for accuracy ensures high data quality. The Statistics of Income sample of New York taxpayers contains 29,000 unweighted returns.
Methodology
For estimating tax expenditures in 2025, components of income, modifications, and itemized deductions on the 2022 population return file are extrapolated to 2025 levels using growth assumptions based on the economic forecast provided by the New York State Division of the Budget during December of 2024. This data file is then used with the Personal Income Tax Simulation Model revised to simulate 2025 Tax Law.
Tax expenditures with values of less than $0.1 million are indicated with an asterisk.
Impact of the 2017 federal Tax Cuts and Jobs Act on New York personal income tax expenditures
Based on the federal changes to the treatment of alimony, moving expenses and reimbursements for moving expenses, New York has amended Tax Law regarding the calculation of New York adjusted gross income for tax year 2018 and after. Regarding moving expenses, the Tax Cuts and Jobs Act suspended the deduction for tax years 2018–2025 for all moving expenses except for members of the Armed Forces (or their spouse or dependents) on active duty that move pursuant to military order. In response, New York amended Tax Law to continue to allow the deduction as it existed prior to 2018 by providing for a New York subtraction from federal adjusted gross income in arriving at New York adjusted gross income. The Tax Cuts and Jobs Act also required that qualified moving expense reimbursements be included in gross income and wages for tax years 2018–2025 except for members of the Armed Forces on active duty that move pursuant to military order. New York amended Tax Law to continue pre-2018 treatment by allowing this amount to be excluded from New York adjusted gross income.
The Tax Cuts and Jobs Act also changed the federal treatment of alimony and separate maintenance payments made pursuant to alimony or separate maintenance agreements executed after December 31, 2018, or executed before 2019 but modified after December 31, 2018. Under these changes, payments made are no longer deductible by the payor and payments received are no longer included in the recipient’s income for federal tax purposes. Subsequent changes to New York Tax Law maintained the previous treatment by decoupling from the federal rules and requiring a subtraction modification for payments made by the payor and the addition of payments received to New York adjusted gross income by the recipient.
The decoupling from the federal changes have resulted in the creation of a new tax expenditure at the state level for the subtraction of moving expenses/moving expense reimbursements.
Federal exclusions from income
In addition to the tax expenditures which are authorized in New York Tax Law, there are numerous federal flow through tax expenditure provisions which impact the New York State personal income tax. This tax begins with a definition of income which is largely derived from provisions of the federal Internal Revenue Code. As a result of this coupling of state definitions of income base to federal definitions, exclusions or deductions from income at the federal level become exclusions or deductions at the state level. Therefore, these provisions automatically become tax expenditures at the state level.
| Tax item | 2018 ($ millions) | 2019 ($ millions) | 2020 ($ millions) | 2021 ($ millions) | 2022 ($ millions) | Forecast 2025 ($ millions) | Reliability level |
|---|---|---|---|---|---|---|---|
| New York modifications | |||||||
| 1. Pension/annuity exclusion | 830.6 | 852.7 | 726.4 | 900.8 | 896.3 | 1,004.2 | 1 |
| 2. Exclusion of Social Security and Tier I railroad retirement benefits (taxable Social Security for federal purposes but New York exempt) | 1,157.7 | 1,233.9 | 1,241.7 | 1,397.2 | 1,461.5 | 1,990.7 | 1 |
| 3. Exclusion of interest on U.S. obligations | 189.5 | 291.3 | 164.9 | 113.5 | 269.2 | 659.4 | 1 |
| 4. Exclusion of pensions, annuities, interest, and lump sum payments received by New York State and municipal retirees | 1,104.4 | 1,128.6 | 1,134.7 | 1,245.4 | 1,271.3 | 1,410.4 | 1 |
| 5. Exclusion of pensions, annuities, interest, and lump sum payments by federal retirement systems | 211.6 | 216.2 | 217.4 | 238.6 | 243.6 | 268.6 | 1 |
| 6. Disability income exclusion | N/A | N/A | N/A | N/A | N/A | N/A | 5 |
| 7. Exclusion of interest or dividends on obligations or securities of a U.S. agency | N/A | N/A | N/A | N/A | N/A | N/A | 5 |
| 8. Exclusion of interest or dividend income on obligations or securities taxable for federal purposes but exempt for New York tax purposes | N/A | N/A | N/A | N/A | N/A | N/A | 5 |
| 9. Exclusion of accelerated death benefits and viatical settlements | * | * | * | * | * | * | 2 |
| 10. Exclusion for contributions to New York State College Choice Tuition Savings Program | 81.2 | 83.3 | 82.5 | 91.5 | 87.3 | 88.1 | 1 |
| 11. Deferral of gain from sale of qualified emerging technology investments | * | * | * | * | * | * | 2 |
| 12. Exclusion of payments to victims of Nazi persecution | * | * | * | * | * | * | 2 |
| 13. Compensation for Members of an Organized Militia | * | * | * | * | * | * | 2 |
| 14. Exclusion for living human organ donors | * | * | * | * | * | * | 2 |
| 15. Exclusion of compensation for service in a combat zone for members of the armed services | * | * | * | * | * | * | 2 |
| 16. Exclusion of small business and/or farm income | 0.7 | 0.9 | 0.8 | 2.6 | 10.7 | 100.0 | 2 |
| 17. Exclusion of income attributable to the New York State Business Incubator and Innovation Hot Spot Support Act | 0.3 | 0.4 | 0.4 | 0.3 | 0.4 | 0.4 | 2 |
| 18. Exclusion of wages received from an employer located in START-UP New York area | 4.9 | 6.2 | 7.4 | 10.1 | 11.0 | 14.0 | 2 |
| 19. Exclusion of service award for volunteer firefighters and ambulance workers | 0.4 | 0.4 | 0.5 | 0.6 | 0.6 | 1.0 | 2 |
| 20. Exclusion of moving expenses and moving expense reimbursements | 1.4 | 1.2 | 0.8 | 1.0 | 1.3 | 1.0 | 2 |
| 21. New York’s COVID-19 pandemic small business recovery grants | -- | -- | -- | 2.6 | 1.5 | 0.0 | 2 |
| 22. Deduction for commercial cannabis activity | -- | -- | -- | -- | 0.7 | 10.0 | 2 |
| New York itemized deductions and exemptions | |||||||
| 23. Value of standard deductions for those returns with itemized deductions in excess of standard deduction | 1,288.6 | 1,298.9 | 1,203.2 | 1,190.1 | 1,193.1 | 1,230.8 | 1 |
| 24. Itemized deductions | |||||||
| a. Medical/dental deduction | 99.8 | 102.3 | 91.0 | 97.6 | 102.6 | 112.9 | 1 |
| b. Interest deduction | 665.4 | 698.2 | 614.4 | 561.0 | 580.8 | 594.3 | 1 |
| c. Charitable contribution deduction | 611.8 | 613.6 | 672.9 | 883.7 | 688.6 | 662.4 | 1 |
| d. Casualty/theft deduction | 1.0 | 0.6 | 0.5 | 1.4 | 1.4 | 1.5 | 1 |
| e. Taxes paid deduction | 657.3 | 704.8 | 664.4 | 638.9 | 653.9 | 670.5 | 1 |
| f. Miscellaneous deductions subject to 2 Percent of AGI limitation | 138.1 | 119.7 | 104.5 | 100.2 | 112.9 | 111.2 | 1 |
| g. Other miscellaneous deductions | 36.2 | 36.7 | 23.0 | 42.7 | 47.1 | 47.9 | 1 |
| h. Union dues deduction | N/A | N/A | N/A | N/A | N/A | N/A | 1 |
| 25. Dependent exemptions | 285.4 | 281.6 | 269.2 | 268.3 | 261.9 | 271.9 | 1 |
| New York credits | |||||||
| 26. Household credit | 87.9 | 85.3 | 83.3 | 83.2 | 71.1 | 63.5 | 1 |
| 27. Earned income credit | 986.8 | 979.0 | 772.3 | 728.5 | 923.1 | 1,070.1 | 1 |
| 28. Real property tax credit (circuit breaker) | 19.2 | 18.6 | 18.7 | 17.2 | 17.9 | 18.0 | 1 |
| 29. Child and dependent care credit | 190.5 | 169.2 | 107.4 | 119.4 | 115.8 | 120.0 | 1 |
| 30. Accumulation distribution credit2 | 0.1 | 0.1 | 0.1 | 0.1 | 0.2 | 0.1 | 1 |
| 31. Solar energy system equipment credit2 | 45.6 | 52.8 | 45.4 | 54.5 | 74.4 | 79.0 | 1 |
| 32. College tuition credit3 | 193.5 | 192.2 | 174.6 | 169.9 | 166.3 | 170.9 | 1 |
| 33. Nursing home assessment tax credit | 20.1 | 20.1 | 17.9 | 16.6 | 18.1 | 19.0 | 1 |
| 34. Empire State child credit5 | 618.5 | 612.9 | 597.5 | 545.6 | 555.4 | 691.0 | 1 |
| 35. Enhanced state earned income tax credit for certain non-custodial parents | 2.1 | 1.9 | 1.2 | 0.7 | 0.9 | 1.0 | 1 |
| 36. Volunteer firefighters and ambulance workers credit | 15.6 | 15.5 | 15.2 | 14.9 | 14.8 | 15.0 | 1 |
| 37. Historic homeownership rehabilitation credit | 2.2 | 3.6 | 3.0 | 4.1 | 4.9 | 7.0 | 1 |
| 38. STAR credit for new homeowners | 310.3 | 478.3 | 579.6 | 659.1 | 760.4 | 924.3 | 4 |
| 39. STAR credit for New York City residents | 695.2 | 723.8 | 743.7 | 735.8 | 741.9 | 748.4 | 4 |
| 40. Employer compensation expense program wage credit | -- | 0.8 | 2.5 | 9.7 | 5.0 | 14.0 | 1 |
| 41. Pass-through entity tax credit4 | -- | -- | -- | 11,971.1 | 13,398.0 | 14,722.0 | 1 |
| 42. Geothermal energy systems credit | -- | -- | -- | -- | 1.8 | 5.0 | 1 |
| 43. Real property tax relief credit | -- | -- | -- | 49.6 | 62.3 | 0.0 | 1 |
| Cross-article credits | |||||||
| 1. Investment tax credit and employment incentive credit2 | 32.2 | 29.5 | 32.8 | 45.2 | 66.6 | 75.0 | 1 |
| 2. Investment tax credit for the financial services industry2 | * | * | * | 0.0 | 0.0 | * | 1 |
| 3. Special additional mortgage recording tax credit2 | 17.2 | 13.0 | 9.1 | 11.8 | 14.6 | 13.0 | 1 |
| 4. Empire Zone, Qualified Empire Zone Enterprise, and zone equivalent areas tax credit2 | |||||||
| a. Empire Zone investment tax credit and employment incentive credit | 5.4 | 2.3 | 1.9 | 5.9 | 2.9 | 1.0 | 1 |
| b. Empire Zone/zone equivalent areas wage tax credit | 3.0 | 2.1 | 1.5 | 2.2 | 1.3 | 1.0 | 1 |
| c. Empire Zone capital credit | 0.1 | 0.1 | * | * | * | * | 1 |
| d. Qualified Empire Zone Enterprise real property tax credit | 4.8 | 1.6 | 0.5 | 0.4 | 0.2 | 1.0 | 1 |
| e. Qualified Empire Zone Enterprise tax reduction credit | 3.3 | 1.5 | 0.3 | * | 0.1 | * | 1 |
| 5. Farmers’ school tax credit | 42.7 | 43.0 | 43.0 | 41.7 | 40.2 | 40.0 | 1 |
| 6. Credit for employment of persons with disabilities2 | * | * | * | 0.7 | * | * | 1 |
| 7. Qualified emerging technology company credits2 | |||||||
| a. Qualified emerging technology company capital tax credit | 2.5 | 1.4 | 1.5 | 1.0 | 0.8 | 1.0 | 1 |
| b. Qualified emerging technology company employment credit | 0.2 | 0.3 | 0.1 | * | 0.2 | 0.2 | 1 |
| 8. Low-income housing credit2 | * | * | * | * | * | * | 1 |
| 9. Credit for purchase of an automated external defibrillator2 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 1 |
| 10. Green building credit2 | 0.0 | * | 0.0 | * | * | * | 1 |
| 11. Long-term care insurance credit2 | 96.0 | 94.0 | 60.7 | 73.6 | 60.6 | 65.0 | 1 |
| 12. Empire State film and commercial production credits | |||||||
| a. Empire State film production credit2 | 8.7 | 10.2 | 3.7 | 5.7 | 11.0 | 20.0 | 1 |
| b. Empire State film post-production credit | 1.4 | 0.6 | 0.1 | 0.2 | 0.4 | 2.0 | 1 |
| c. Empire State commercial production credit | 0.0 | 0.0 | * | 2.0 | 0.5 | 1.0 | 1 |
| 13. Security training tax credit2 | 0.1 | * | 0.1 | * | * | * | 1 |
| 14. Brownfields tax credits | 12.5 | 11.0 | 10.2 | 35.0 | 23.9 | 15.5 | 1 |
| a. Brownfield redevelopment tax credit | 12.1 | 10.6 | 9.9 | 34.4 | 23.7 | 15.0 | 1 |
| b. Remediated brownfield credit for real property taxes | 0.4 | 0.4 | 0.3 | 0.6 | 0.2 | 0.5 | 1 |
| c. Environmental remediation insurance credit | 0.0 | 0.0 | 0.0 | 0.0 | * | * | 1 |
| 15. Biofuel production credit | * | * | 0.0 | 0.0 | 0.0 | * | 1 |
| 16. Land conservation easement credit | 1.8 | 1.8 | 1.9 | 1.9 | 2.1 | 2.0 | 1 |
| 17. Clean heating fuel credit | 3.8 | 3.9 | 3.6 | 4.5 | 4.6 | 4.5 | 1 |
| 18. Rehabilitation of historic properties credit | 12.2 | 14.5 | 11.0 | 15.7 | 14.9 | 20.0 | 1 |
| 19. Excelsior Jobs Program tax credits | 2.3 | 2.5 | 2.0 | 3.1 | 2.8 | 25.0 | 1 |
| 20. Credit for companies who provide transportation to individuals with disabilities | 0.5 | 1.5 | 0.3 | 0.7 | 0.9 | 1.0 | 1 |
| 21. Economic Transformation and Facility Redevelopment Program tax credit | * | 0.0 | 0.0 | 0.0 | 0.0 | * | 1 |
| 22. New York Youth Jobs Program tax credit | 15.8 | 20.6 | 19.5 | 28.1 | 31.5 | 20.0 | 1 |
| 23. Empire State Jobs Retention Program credit | 0.5 | 0.6 | 0.7 | 0.4 | 0.9 | 1.0 | 1 |
| 24. Alcoholic beverage production credit (beer production credit) | 1.5 | 1.4 | 1.4 | 1.7 | 1.6 | 3.0 | 1 |
| 25. Alternative fuels and electric vehicle recharging property credit | 0.2 | 0.2 | 0.2 | 0.6 | 1.2 | 2.0 | 1 |
| 26. START-UP NY tax elimination credit | 0.6 | 0.3 | 0.8 | 12.6 | 0.5 | 2.0 | 1 |
| 27. Credit for the excise tax on telecommunication services paid by START-UP NY businesses | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | * | 1 |
| 28. Real property tax relief credit for manufacturing | 9.1 | 9.5 | 10.2 | 10.6 | 10.8 | 11.0 | 1 |
| 29. Hire a vet credit1 | * | * | * | * | 0.1 | 1.0 | 1 |
| 30. Musical and theatrical production credit | * | * | 0.0 | 0.0 | * | 2.0 | 1 |
| 31. Workers with disabilities tax credit | * | * | * | * | * | 1.0 | 1 |
| 32. Employee training incentive credit | * | 0.0 | 0.0 | * | * | 3.0 | 1 |
| 33. Farm workforce retention credit | 4.5 | 7.8 | 6.4 | 9.8 | 20.3 | 20.0 | 1 |
| 34. Empire State apprenticeship tax credit | * | 0.1 | 0.1 | 0.2 | 0.1 | 3.0 | 1 |
| 35. Life sciences research and development tax credit | 0.0 | 0.0 | 0.3 | 0.1 | * | 1.0 | 1 |
| 36. Farm donations to food pantries credit | 0.1 | 0.1 | 0.2 | 0.1 | 0.2 | 0.2 | 1 |
| 37. Employer provided child care credit | -- | -- | 0.2 | 0.4 | 0.4 | 4.0 | 1 |
| 38. Recovery tax credit | -- | -- | * | 0.4 | 0.2 | 1.0 | 1 |
| 39. Restaurant return-to-work tax credit | -- | -- | -- | 4.6 | 0.0 | 0.0 | 1 |
| 40. New York City musical and theatrical production tax credit | -- | -- | -- | 0.0 | 8.9 | 13.0 | 1 |
| 41. Covid-19 capital costs tax credit | -- | -- | -- | -- | 2.5 | * | 1 |
| 42. Grade number 6 heating oil conversion tax credit | -- | -- | -- | -- | 0.0 | 0.0 | 1 |
| 43. Farm employer overtime credit | -- | -- | -- | -- | -- | 25.0 | 1 |
| 44. Additional restaurant return-to-work tax credit | -- | -- | -- | -- | 0.8 | * | 1 |
| 45. Empire State digital gaming media production tax credit | -- | -- | -- | -- | -- | 2.5 | 4 |
| 46. Child care creation and expansion credit | -- | -- | -- | -- | -- | * | 4 |
| 47. Newspaper and Broadcast Media Jobs Program credit1 | -- | -- | -- | -- | -- | 5.0 | 4 |
| 48. Commercial security tax credit1 | -- | -- | -- | -- | -- | 2.0 | 4 |
- A new tax expenditure item or a revision of the methodology or revisions in the data sources resulted in an estimate which better reflects the tax expenditure value.
- Credit estimates include nonrefundable amounts used to reduce current year tax liability. Figure also includes refundable amounts where applicable.
- Estimate includes value of itemized deduction and credit
- Includes credit claims filed with IT-205
- In 2024, a total of $306 million was issued for the one-time payment of the Additional New York State Child Credit payments that is not reflected in the estimate shown in this table.
| * | Less than $0.1 million |
|---|---|
| -- | The tax expenditure was not applicable for these years |
| N/A | No data available |
New York modifications
The New York adjusted gross income of a resident or nonresident individual is defined as federal adjusted gross income with modifications as specified by New York Tax Law, Article 22, § 612.
1. Pension/annuity exclusion
Citation: Tax Law § 612(c)(3-a)
Effective date: Effective for taxable years beginning on or after January 1, 1982
Description: Taxpayers aged 59 ½ and over may exclude from New York adjusted gross income pensions and annuities, to the extent included in federal adjusted gross income, but not in excess of $20,000 ($20,000 each for two married pensioners or annuitants filing jointly).
2. Exclusion of Social Security and Tier 1 railroad retirement benefits (Taxable Social Security for federal purposes but New York exempt)
Citation: Tax Law § 612(c)(3-c)
Effective date: Effective for taxable years beginning after December 31, 1983
Description: Taxpayers may exclude from New York adjusted gross income Social Security and Tier 1 railroad retirement benefits, to the extent included in federal adjusted gross income.
3. Exclusion of interest on U.S. obligations
Citation: Tax Law § 612(c)(1)
Effective date: Effective for taxable years beginning on or after January 1, 1960
Description: Taxpayers may exclude from New York adjusted gross income interest income on obligations of the United States and its possessions, to the extent included in federal adjusted gross income. Federal law prohibits New York from taxing this item.
4. Exclusion of pensions, annuities, interest, and lump sum payments received by New York State and municipal retirees
Citation: Tax Law § 612(c)(3)(i)
Effective date: Effective for taxable years beginning on or after January 1, 1960
Description: Retirement payments received by officers and employees (or their beneficiaries) of New York State and its municipalities (including corporations and authorities), to the extent includable in federal adjusted gross income, may be subtracted in computing New York adjusted gross income. The state Constitution prohibits taxation of this income.
5. Exclusion of pensions, annuities, interest, and lump sum payments by federal retirement systems
Citation: Tax Law § 612(c)(3)(ii)
Effective date: Effective for tax years beginning on or after January 1, 1989
Description: Payments received by officers and employees (and their beneficiaries) from federal retirement systems to the extent includable in federal adjusted gross income, may be subtracted in determining New York adjusted gross income. A 1989 U.S. Supreme Court ruling (Davis v. Michigan Department of Treasury) mandated that states must provide equal tax treatment for federal and state/local pensions.
6. Disability income exclusion
Citation: Tax Law § 612(c)(3-b)
Effective date: Effective for taxable years beginning after December 31, 1983
Description: A taxpayer may subtract up to $5,200 of disability income included in federal adjusted gross income, to the extent that such income would have been excluded from federal gross income prior to January 1, 1984, under the repealed provisions of Internal Revenue Code § 105(d). The total exclusion for disability and pension and annuity income may not exceed $20,000. The exclusion is reduced by the amount that the taxpayer’s adjusted gross income exceeds $15,000.
7. Exclusion of interest or dividends on obligations or securities of a U.S. agency
Citation: Tax Law § 612(c)(2)
Effective date: Effective for taxable years on or after January 1, 1960
Description: Taxpayers may subtract from federal adjusted gross income, interest or dividend income on obligations or securities of a U.S. agency, to the extent that such income has been included in federal adjusted gross income. Federal law prohibits New York from taxing this income.
8. Exclusion of interest or dividend income on obligations or securities taxable for federal purposes but exempt for New York Tax purposes
Citation: Tax Law § 612(c)(6)
Effective date: Effective for taxable years beginning on or after January 1, 1960
Description: The taxpayer may subtract from federal adjusted gross income interest or dividend income on obligations or securities, to the extent that such income is exempt for New York income tax purposes under New York law but is subject to federal income tax.
9. Exclusion of accelerated death benefits and viatical settlements
Citation: Tax Law § 612(c)(30)
Effective date: Effective for taxable years beginning on or after January 1, 1991, for death benefits and for payments received on or after July 27, 1994, on viatical settlements.
Description: Taxpayers may subtract from federal adjusted gross income accelerated payments of part or all of the death benefit or special surrender value of a life insurance policy as a result of certain diagnoses (for example, terminal illnesses), specified in the Insurance Law. Also, taxpayers may subtract the amount received from a viatical settlement company from the sale of a life insurance policy. Persons with catastrophic or life-threatening illnesses are eligible for this subtraction when they sell such policies to a viatical settlement company licensed by the New York State Department of Financial Services.
10. Exclusion for contributions to New York State College Choice Tuition Savings Program
Citation: Tax Law § 612(c)(32)
Effective date: Effective for taxable years beginning after December 31, 1997
Description: Taxpayers may subtract from federal adjusted gross income up to $5,000 per year ($10,000 for married couples filing jointly) of contributions to family tuition accounts, as defined in Education Law Article 14-A to the extent not deductible or eligible for credit for federal tax purposes. The maximum account balance may not exceed $520,000 per beneficiary, and the State Comptroller has authority to increase this figure to reflect increases in higher education costs.
11. Deferral of gain from sale of qualified emerging technology investments
Citation: Tax Law § 612(c)(34)
Effective date: Effective for qualified investments acquired on or after March 12, 1998
Description: Gain from the sale of qualified emerging technology investments may be subtracted from federal adjusted gross income, if reinvested in another qualified emerging technology investment. The amount subtracted must be added to federal adjusted gross income when the reinvestment is sold if the gain is not reinvested in a qualified emerging technology investment.
12. Exclusion of payments to victims of Nazi persecution
Citation: Tax Law §§ 612(c)(35) and (36)
Effective date: Effective for taxable years beginning on or after January 1, 1995
Description: Taxpayers may subtract certain distributions, to the extent included in federal adjusted gross income, made based on their status as a victim of Nazi persecution as defined in Public Law 103-286. The subtraction also applies to distributions received by victims’ spouses and needy descendants. In addition, a subtraction is allowed for items of income included in federal adjusted gross income attributable to assets stolen or hidden from, or otherwise lost by victims of Nazi persecution immediately prior to, during, or after World War II.
13. Exclusion of compensation for members of an organized militia
Citation: Tax Law § 612(c)(8-b) (i)(ii)
Effective date: Effective for taxable years beginning on or after January 1, 2004
Description: An individual who is a member of a New York State organized militia may subtract from federal adjusted gross income compensation received for performing active service within New York State pursuant to active-duty orders issued by the Governor or the federal government.
14. Exclusion for living human organ donors
Citation: Tax Law § 612(c)(38)
Effective date: Effective for taxable years beginning on or after January 1, 2007
Description: Resident taxpayers may subtract certain unreimbursed expenses from federal adjusted gross income which are incurred by the taxpayer while donating one or more of their human organs, while living, to another human being for human organ transplantation. Unreimbursed expenses include travel expenses, lodging expenses and lost wages. In addition, a human organ is defined as all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. The subtraction can only be claimed once and must be claimed in the taxable year in which the human organ transplantation occurs. The maximum allowable subtraction is $10,000 per taxpayer.
15. Exclusion of compensation for service in a combat zone for members of the armed services of the United States
Citation: Tax Law § 612(c)(8-c)
Effective date: Effective for taxable years beginning on or after January 1, 2008
Description: An individual who is a member of the armed services of the United States may subtract from federal adjusted gross income compensation received for performing active service in an area designated by the President of the United States by executive order as a combat zone.
16. Exclusion of small business and/or farm income
Citation: Tax Law § 612(c)(39)
Effective date: Effective for taxable years beginning on or after January 1, 2014
Description: Resident taxpayers with small business and/or farm income may subtract three percent of the net items of income, gain, loss, and deduction attributable to a business or farm included in federal adjusted gross income (but not less than zero) for tax year 2014. This is increased to 3.75 percent in tax year 2015, five percent for tax year 2016 until tax year 2022 where it is increased to 15 percent. Small business is defined as a sole proprietor or a farm business employing one or more persons during the taxable year that has net business income or net farm income of less than $250,000 or nonfarm LLCs, partnerships, and S-corporations with less than $1.5 million in New York source gross income.
17. Exclusion of income attributable to the New York State Business Incubator and Innovation Hot Spot Support Act
Citation: Tax Law § 612(c)(39)
Effective date: Effective for taxable years beginning on or after January 1, 2014
Description: The creation of the New York State Business Incubator and Innovation Hot Spot Support Act allows an exclusion for five years beginning with the first tax year a qualified entity becomes a tenant in or part of an innovation hot spot. An individual who is the sole proprietor of a qualified entity, or a member of a limited liability company treated as a partnership, a partner in a partnership, or a shareholder in a New York S corporation, who if taxable under Article 22 is allowed a deduction (in the form of a subtraction modification) for the amount of income or gain included in his or her federal adjusted gross income, only to the extent that the income or gain is attributable to the operations of the qualified entity at (or as part of) an innovation hot spot. The amount of the subtraction modification is determined using books and records.
18. Exclusion of wages received from an employer located in START-UP New York area
Citation: Tax Law § 612(c)(40)
Effective date: Effective for taxable years beginning on or after January 1, 2014
Description: Resident taxpayers may subtract any wages received as an employee of a business located within a tax-free New York area during the first five years of such business's ten-year taxable year period to the extent the wages are included in federal adjusted gross income. During the second five years of such business's ten-year taxable period, resident taxpayers may subtract the first $200,000 of such wages in the case of a taxpayer filing as a single individual, the first $250,000 of such wages in the case of a taxpayer filing as a head of household, and $300,000 of such wages in the case of a taxpayer filing a joint return, to the extent included in federal adjusted gross income.
19. Exclusion of service award for volunteer firefighters and ambulance workers
Citation: Tax Law § 612(c)(41)
Effective date: Effective for taxable years beginning on or after January 1, 2014
Description: Volunteer firefighters and volunteer ambulance workers who have not attained the age of 59 ½ may subtract service awards included in gross income for federal tax purposes. To qualify for the subtraction modification, the service award must be from a length of service defined contribution plan or defined benefit plan as provided for in General Municipal Law Articles 11-A, 11-AA, 11-AAA, and 11-AAAA and be included in the computation of the taxpayer’s federal adjusted gross income for the tax year. However, a service award will not qualify for the subtraction modification if it is distributed in the form of a lump-sum distribution as defined in Internal Revenue Code § 402(e)(4)(A) and taxed under New York State Tax Law § 603.
20. Exclusion of moving expenses and moving expense reimbursements
Citation: Tax Law § 612(x)
Effective date: Effective for taxable years beginning on or after January 1, 2018
Description: Taxpayers may exclude from New York adjusted gross income any applicable moving expenses paid by the taxpayer during the taxable year and any applicable qualified moving expense reimbursement received by the taxpayer during the taxable year. Applicable qualified moving expenses and reimbursements are those deductions allowed under the Internal Revenue Code immediately prior to the enactment of Public Law 115-97.
21. New York’s COVID-19 pandemic small business recovery grants
Citation: Tax Law § 612(c)(45)
Effective date: Taxable years beginning on or after January 1, 2021
Description: Grants received pursuant to New York’s COVID-19 Pandemic Small Business Recovery Grant Program are excluded from taxable income.
22. Deduction for commercial cannabis activity
Citation: Tax Law § 612(c)(46)
Effective date: Effective for tax years beginning on or after January 1, 2022
Description: A taxpayer engaged in commercial cannabis activity may subtract expenses related to adult-use cannabis products that are disallowed federally under Internal Revenue Code § 280E.
New York itemized deductions and exemptions
Individual taxpayers who elect not to use the standard deduction may reduce their New York adjusted gross income by their itemized deductions, and all taxpayers are allowed exemptions for dependents who qualify for the federal exemption.
23. Value of standard deductions for those returns with itemized deductions in excess of standard deduction
Citation: Tax Law § 614
Effective date: Effective for taxable years beginning on or after January 1, 1960
Description: Because all taxpayers are entitled to a standard deduction as a minimum, itemizers have their standard deduction built into their total deduction.
24. Itemized deductions
Taxpayers may itemize deductions on their state returns irrespective of actions taken on their federal returns.
New York itemized deductions are freestanding and represent federal law as it existed for tax year 2017. Thus, the citations below reference the Internal Revenue Code prior to the enactment of Public Law 115-97. They are authorized in New York Tax Law, Article 22, § 615. New York limits the availability of itemized deductions for certain high-income taxpayers. The percentage of disallowed deductions varies according to the taxpayer’s New York adjusted gross income and filing status. Itemized deductions for a single taxpayer with New York adjusted gross income in excess of $100,000 are reduced by up to 25 percent. This reduction also applies to married taxpayers filing jointly with New York adjusted gross income in excess of $200,000 and heads of household with New York adjusted gross income exceeding $250,000. For all taxpayers with New York adjusted gross income above $475,000, itemized deductions are reduced by up to an additional 25 percent, equaling 50 percent for all taxpayers with New York adjusted gross income above $525,000. Beginning in tax year 2009 and after, the New York itemized deduction limitation has been revised to further limit a taxpayer’s New York itemized deduction. If a taxpayer’s New York adjusted gross income is more than $1,000,000, but not more than $10 million, the New York itemized deduction is limited to 50 percent of the federal itemized deduction for charitable contributions. For tax years beginning after 2012, if an individual’s New York adjusted gross income is more than $10 million, the itemized deduction is limited to 25 percent of the federal itemized deduction for charitable contributions. All other federal itemized deductions are reduced to zero.
The federal itemized deduction limitation that was in effect prior to enactment of Public Law 115-97 further reduces the value of the deductions.
a. Medical/dental deduction
Citation: Internal Revenue Code § 213
Effective date: Effective for taxable years beginning on or after January 1, 1960
Description: Medical and dental expenses paid during the taxable year by and on behalf of the individual or his/her spouse or dependent may be deducted from federal adjusted gross income, as an itemized deduction, to the extent that the expenses (a) exceed 7.5 percent of adjusted gross income, and (b) are not compensated for by insurance or otherwise.
b. Interest deduction
Citation: Internal Revenue Code § 163
Effective date: Effective for taxable years beginning on or after January 1, 1960
Description: A taxpayer may deduct mortgage and investment interest paid or accrued during the taxable year on debt owed by the taxpayer. However, interest incurred on loans made to purchase securities, the income from which is tax exempt in New York, is not deductible for New York purposes. Generally, mortgage interest is totally deductible (certain limitations apply).
c. Charitable contribution deduction
Citation: Internal Revenue Code § 170
Effective date: Effective for taxable years beginning on or after January 1, 1960
Description: Taxpayers may subtract from federal adjusted gross income contributions made to qualified organizations, up to a limit of 50 percent of their adjusted gross income. In certain cases, lower limits may apply.
d. Casualty/theft deduction
Citation: Internal Revenue Code § 165
Effective date: Effective for taxable years beginning on or after January 1, 1960
Description: Individuals may deduct casualty losses. Casualty losses mean uncompensated losses sustained as a result of the total or partial destruction of property, caused by a sudden, unexpected, or unusual event. Losses incurred as a consequence of the theft or embezzlement of the taxpayer’s property may also be deducted from federal gross income. In both cases, a deduction is allowed only with respect to individual losses which exceed $100 and to the extent that total net losses exceed 10 percent of federal adjusted gross income.
e. Taxes paid deduction
Citation: Internal Revenue Code §§ 164, 615(c)(1)
Effective date: Effective for taxable years beginning on or after January 1, 1960, for property taxes. Effective for taxable years beginning on or after January 1, 2010, and expiring at the end of tax year 2011 for sales and use taxes.
Description: Individuals may deduct from federal adjusted gross income, real and personal property taxes which have been paid to any state, local or foreign government during the year.
f. Miscellaneous deductions subject to 2 percent of adjusted gross income limitation
Citation: Internal Revenue Code §§ 67, 212, 280A
Effective date: Effective for taxable years beginning after December 31, 1986 (§ 67); on or after January 1, 1960 (§ 212); after December 31, 1975 (§ 280A)
Description: Taxpayers may deduct certain miscellaneous expenses. Miscellaneous itemized deductions consist of three broad categories of personal expenses: deductible employee expenses, deductible expenses of producing income, and other deductible expenses (essentially, tax counsel and assistance and appraisal fees). The first two categories include such items as work clothes and uniforms, union dues and expenses, safe deposit box rentals, and malpractice insurance premiums.
g. Other miscellaneous deductions
Citation: Internal Revenue Code § 67
Effective date: Effective for taxable years beginning on or after January 1, 1987
Description: Taxpayers may deduct miscellaneous expenses not subject to the 2 percent AGI limitation. These include gambling losses (up to the amount of gambling winnings), impairment-related work expenses, and certain other expenses.
h. Union dues deduction
Citation: Tax Law § 615(d)
Effective date: Effective for taxable years beginning on or after January 1, 2018
Description: A taxpayer may deduct the full amount of union dues paid during a tax year to the extent the dues were not allowed as a federal miscellaneous itemized deduction under Internal Revenue Code § 67. In the event that any amount of dues was allowed under Internal Revenue Code § 67, then the amount allowed as a New York State itemized deduction is equal to the amount of union dues disallowed under federal law.
25. Dependent exemptions
Citation: Tax Law § 616
Effective date: Effective for taxable years beginning on or after January 1, 1960
Description: In computing taxable income, taxpayers may deduct $1,000 for each exemption for qualified dependents to which they are entitled a deduction for federal income tax purposes.
New York credits
Credits are amounts which may be subtracted from the individual’s computed state tax liability. The credits described below are specific to the personal income tax. Descriptions of other tax credits that are available under the personal income tax as well as other tax articles are contained in the Cross-article tax credits section of the report.
26. Household credit
Citation: Tax Law § 606(b)
Credit type: Nonrefundable/non-carryforward
Effective date: Effective for taxable years beginning on or after January 1, 1978
Description: Taxpayers with certain incomes may claim a credit as shown in the table below:
| Single filing status if federal adjusted gross income is: | All other filing statuses if federal adjusted gross income is: | ||||||
|---|---|---|---|---|---|---|---|
| Over | but not over | the credit is | Over | but not over | the credit is | + | for each federal exemption |
| $0 | $5,000 | $75 | $0 | $5,000 | $75 | $15 | |
| 5,000 | 6,000 | 60 | 5,000 | 6,000 | 60 | 15 | |
| 6,000 | 7,000 | 50 | 6,000 | 7,000 | 50 | 15 | |
| 7,000 | 20,000 | 45 | 7,000 | 20,000 | 45 | 15 | |
| 20,000 | 25,000 | 40 | 20,000 | 22,000 | 50 | 10 | |
| 25,000 | 28,000 | 20 | 22,000 | 25,000 | 40 | 10 | |
| 28,000 | No credit | 25,000 | 28,000 | 35 | 5 | ||
| 28,000 | 32,000 | 15 | 5 | ||||
| 32,000 | No credit | ||||||
27. Earned income credit
Citation: Internal Revenue Code § 32, Tax Law § 606(d)
Credit type: Refundable (residents only)
Effective date: Effective for taxable years beginning after 1993
Description: Taxpayers may claim a credit equal to 30 percent of their federal earned income credit. In previous tax years, the credit equaled the following percentages of the federal credit:
| 1994 | 1995 | 1996–1999 | 2000 | 2001 | 2002 | 2003+ |
|---|---|---|---|---|---|---|
| 7.5% | 10% | 20% | 22.5% | 25% | 27.5% | 30% |
The table below shows income eligibility parameters and maximum amounts for the 2025 tax year:
| Eligibility parameters | Maximum creditable earnings | Federal credit rate | Maximum state credit | Income for start of phase-out (MFJ)* | Others | Income cut-off (MFJ)* | Others |
|---|---|---|---|---|---|---|---|
| Taxpayers with 1 child | 12,730 | 34% | 1,298 | 30,470 | 23,350 | 57,554 | 50,434 |
| Taxpayers with 2 children | 17,880 | 40% | 2,146 | 30,470 | 23,350 | 64,430 | 57,310 |
| Taxpayers with 3 or more children | 17,880 | 45% | 2,414 | 30,470 | 23,350 | 68,675 | 61,555 |
| Taxpayers aged 25–64 without children | 8,490 | 7.65% | 195 | 17,730 | 10,620 | 26,214 | 19,104 |
* Earned income or federal adjusted gross income, whichever is greater.
Taxpayers must subtract the amount of household credit used to reduce tax liability from the earned income credit.
28. Real property tax credit (circuit breaker)
Citation: Tax Law § 606(e)
Credit type: Refundable
Effective date: Effective for taxable years beginning after December 31, 1977
Description: Qualified individuals may claim a credit in the amount of 50 percent of excess real property taxes, determined according to the level of household gross income, subject to certain specified conditions and limits. Eligibility for the credit depends on the size of household gross income ($18,000 or less), property use, the value of the property, or the adjusted rent of a tenant. The credit claimant must be a New York resident for the entire taxable year. The maximum credit is $375 for taxpayers aged 65 and over and $75 for taxpayers under age 65. The amount of the credit decreases as household gross income increases. Only one credit is allowed per household.
29. Child and dependent care credit
Citation: Tax Law § 606(c)
Credit type: Refundable (residents only)
Effective date: Effective for taxable years beginning after December 31, 1976
Description: Taxpayers may claim a credit equal to a percentage of the federal credit for household and dependent care expenses necessary to allow gainful employment. The federal credit is based upon maximum work-related, allowable expenses of a total of $3,000 for one qualifying individual, or $6,000 for two or more qualifying individuals. The maximum credit rate is 35 percent for taxpayers with incomes less than $15,000 and a minimum credit rate of 20 percent for taxpayers with incomes exceeding $43,000.
The New York State credit is refundable and equals varying percentages of the federal credit ranging from 110 percent where New York adjusted gross income is $25,000 or less to 20 percent where New York adjusted gross income exceeds $150,000. In addition, the New York State credit is calculated allowing higher expense maximums for those with more than two qualifying individuals: $7,500 (three qualifying individuals), $8,500 (four), and $9,000 (five or more).
30. Accumulation distribution credit
Citation: Tax Law §§ 621 and 635
Credit type: Nonrefundable/non-carryforward
Effective date: Effective for taxable years beginning on or after January 1, 1962
Description: Beneficiaries of trusts (residents and nonresidents) receiving an accumulation distribution can claim a credit for tax paid by the trust fiduciary on income included in the distribution.
31. Solar energy system equipment credit
Citation: Tax Law § 606(g-1)
Credit type: Nonrefundable/carryforward
Effective date: Effective for property placed in service in taxable years beginning on or after January 1, 1998
Description: Taxpayers may claim a credit equal to 25 percent of qualified solar energy system equipment expenditures which are expenditures for the purchase and installation of solar energy system equipment used at a principal residence in New York. Qualified expenditures also include expenditures for the leasing of solar energy systems equipment or the purchase of power generated by qualified systems under a written agreement that spans at least ten years. The credit was expanded in 2008 to apply to members of large multi-unit dwellings like cooperative housing corporations and condominium associations. Qualified expenditures include material and installation costs relating to components utilizing solar radiation to produce energy designed to provide heating, cooling, hot water, or electricity for residential use. The credit is capped at $3,750 for equipment placed in service before September 1, 2006, and $5,000 for equipment placed in service after such date. If the credit exceeds tax liability, taxpayers may carry over the credit for five years.
32. College tuition credit/deduction
Citation: Tax Law §§ 606(t), 615(d)(4)
Credit type: Refundable
Effective date: Effective for tax years beginning on or after January 1, 2001
Description: A credit is permitted for undergraduate college tuition expenses paid by New York residents on behalf of themselves, their spouses, or dependents to attend qualifying in-state or out-of-state institutions of higher education. The credit equals 4 percent of expenses, up to a maximum of $10,000 of expenses per student. The minimum credit equals the lesser of expenses or $200.
In lieu of the credit, both resident and nonresident taxpayers may elect to deduct qualifying expenses as an itemized deduction. The maximum deduction is a maximum of $10,000 of expenses per student.
Qualifying tuition expenses are defined as net of scholarships and financial aid. Qualifying institutions include colleges and business, trade, technical, or other occupational schools recognized and approved by the Regents of the University of the State of New York, or by other nationally recognized accrediting agencies accepted by the Regents, which provide study leading to a post-secondary degree, certificate, or diploma. Tuition paid by a dependent student who is claimed on a parent’s New York return is attributed to the parent and used by the parent to claim the credit or deduction.
| New York adjusted gross income | Number of claims | Amount claimed (millions $) |
|---|---|---|
| Less than $10,000 | 41,083 | $12.3 |
| $10,000–$24,999 | 76,933 | $20.6 |
| $25,000–$49,999 | 97,994 | $25.7 |
| $50,000–$99,999 | 102,009 | $30.2 |
| $100,000–$199,999 | 109,160 | $41.7 |
| $200,000 and over | 78,780 | $35.8 |
| Total: | 505,959 | $166.2 |
33. Nursing home assessment tax credit
Citation: Tax Law § 606(hh)
Credit type: Refundable
Effective date: Effective for taxable years beginning on or after January 1, 2005
Description: Taxpayers may claim a nursing home assessment tax credit equal to the assessment imposed on the gross receipts of residential health care facilities under Public Health Law § 2807-d. The credit is allowed in cases where the assessment is paid by the taxpayer and is not covered under Medicaid or private insurance.
| New York adjusted gross income | Number of claims | Amount claimed (millions $) |
|---|---|---|
| Less than $10,000 | 1,460 | $6.7 |
| $10,000–$24,999 | 513 | $2.7 |
| $25,000–$49,999 | 479 | $2.6 |
| $50,000–$99,999 | 469 | $2.9 |
| $100,000–$199,999 | 326 | $2.3 |
| $200,000 and over | 132 | $0.9 |
| Total: | 3,379 | $18.1 |
34. Empire State child credit
Citation: Tax Law § 606(c-1)
Credit type: Refundable (residents only)
Effective date: Effective for taxable years beginning on or after January 1, 2006
Description: Resident taxpayers with children ages 4–16 may claim a credit equal to the greater of $100 times the number of children who qualify for the federal child tax credit as it existed for tax year 2017, or 33 percent of the taxpayer’s allowed federal child tax credit as it existed for tax year 2017. The federal credit is based on 2017 law and is a maximum of $1,000 per qualifying child. The federal credit phases-out beginning at $110,000 of modified federal adjusted gross income for married taxpayers filing jointly, and $75,000 for others. New York taxpayers with modified federal adjusted gross income above these thresholds may only claim a New York credit equal to 33 percent of their allowed federal credit.
For tax years beginning on or after January 1, 2023, the Empire State child credit is expanded to include children under the age of 4.
| New York adjusted gross income | Number of claims | Amount claimed (millions $) |
|---|---|---|
| Less than $10,000 | 86,308 | $19.8 |
| $10,000–$24,999 | 284,430 | $121.3 |
| $25,000–$49,999 | 384,021 | $189.9 |
| $50,000–$99,999 | 358,343 | $169.7 |
| $100,000–$199,999 | 142,097 | $54.3 |
| $200,000 and over | 931 | $0.4 |
| Total: | 1,256,130 | $555.4 |
35. Enhanced State earned income tax credit for certain non-custodial parents
Citation: Tax Law § 606(d-1)
Credit type: Refundable (residents only)
Effective date: Effective for taxable years beginning on or after January 1, 2006
Description: Certain taxpayers may claim an enhanced New York State earned income tax credit. To qualify for the enhanced credit, claimants must be a resident taxpayer, age 18 and over, and have a minor child with whom they do not reside. The credit is equal to the greater of 20 percent of the federal earned income tax credit that the taxpayer would otherwise be able to claim for one qualifying child (if they were a custodial parent) or 2.5 times the earned income tax credit for taxpayers without qualifying children. Claimants must have a child support order in effect for at least half the tax year and have made required support payments. In addition, unlike the existing state earned income tax credit, the amount of credit allowed is not reduced by the amount of the state household credit used by the taxpayer. Taxpayers are not allowed more than one credit if they have multiple children or support orders.
36. Volunteer firefighters and ambulance workers credit
Citation: Tax Law § 606(e-1)
Credit type: Refundable
Effective date: Effective for taxable years beginning on or after January 1, 2007
Description: Resident taxpayers serving as active volunteer firefighters or volunteer ambulance workers may claim a $200 credit. To receive the credit, the taxpayer must be an active volunteer for the entire taxable year and must not be receiving a real property tax exemption relating to such service. In the case of a taxpayer and spouse filing jointly who both qualify for the credit, the amount of the credit is $400.
37. Historic homeownership rehabilitation credit
Citation: Tax Law § 606(pp)
Credit type: Nonrefundable/carryforward/refundable to certain taxpayers
Effective date: Effective for taxable years beginning on or after January 1, 2007; amended credit effective for taxable years beginning on or after January 1, 2010, and before January 1, 2025
Description: Taxpayers may claim a tax credit for the rehabilitation of historic homes located in New York State. The amount of the credit is equal to 20 percent of qualified rehabilitation expenditures made by the taxpayer with respect to a qualified historic home. A qualified historic home is defined as one located in a targeted area within the meaning of Internal Revenue Code § 143(j) and located in an area of a city, town, or village whose governing body has identified by resolution that such area is an area in need of community renewal, and which has adopted an historic preservation and community renewal program. The taxpayer must own the home and reside there during the taxable year. The credit is limited to $25,000 per residence. For taxable years beginning on or after January 1, 2010, the credit is amended by increasing the credit cap from $25,000 to $50,000, making the credit refundable for taxpayers with New York adjusted gross income that is less than or equal to $60,000, and expanding the definition of eligible properties to include those located within a census tract that is at or below 100 percent of the state median family income in the most recent federal census. After December 31, 2024, the credit reverts back to pre-2010 law.
38. STAR credit for new homeowners
Citation: Tax Law § 606(eee)
Credit type: Refundable
Effective date: Effective for taxable years beginning on or after January 1, 2016
Description: Taxpayers purchasing a primary residence in the state who qualify for the STAR exemption may claim a refundable credit equal to the STAR tax savings attributable to the exemption. Beginning with the 2016–2017 assessment rolls, the current STAR exemption program will be closed to new applicants. Current recipients of STAR exemptions will be permitted to keep those exemptions as long as they continue to own their current homes, but once their homes are transferred to new owners, the new owners would transfer to the new income tax credit. Current STAR recipients will also have the option of giving up their STAR exemptions if they wish to receive the income tax credit instead, but they would be under no obligation to do so. New owners who wish to receive advance payment of the credit must apply to the Tax Department by July 1. By September 15, the Tax Commissioner will determine eligibility for the STAR credit and will mail an advance payment of the credit by September 30 or as soon as practicable. The Commissioner will notify school districts at least 30 days prior to the levy of school district taxes to place a statement on the tax bill regarding the credit amount. Taxpayers who qualify for the credit, but do not apply for an advance payment by July 1 may submit a claim at a later time.
39. STAR credit for New York City residents
Citation: Tax Law § 606(eee)
Credit type: Refundable
Effective date: Effective for taxable years beginning on or after January 1, 2016
Description: Resident taxpayers in New York City whose incomes are $250,000 or less may claim a refundable School Tax Relief Fixed Amount Credit in the amount of $125 for married taxpayers filing jointly and $62.50 for all others. Effective for taxable years beginning on or after January 1, 2017, the credit is expanded to include a refundable rate reduction amount. City residents whose incomes are $500,000 or less who previously received the benefit of lower New York City personal income tax rates are instead eligible to receive this equivalent state income tax credit.
40. Employer compensation expense program wage credit
Citation: Tax Law § 606(ccc)
Credit type: Nonrefundable/carryforward
Effective date: Effective for taxable years beginning on or after January 1, 2019
Description: Employees working for an employer who elected to participate in the Employer Compensation Expense Program (ECEP) may be entitled to claim the ECEP wage credit. The credit amount is equal to 1.5 percent of eligible wages earned in tax year 2019, increasing to 3 percent in 2020 and 5 percent in tax years 2021 and after. For purposes of claiming the credit, eligible wages are wages and compensation in excess of $40,000 paid by an employer participating in the program. Qualifying taxpayers must reduce the credit amount by their effective personal income tax rate calculated prior to the application of any credits.
41. Pass-through entity tax credit
Citation: Tax Law § 606(kkk)
Credit type: Refundable
Effective date of credit: Effective for tax years beginning on or after January 1, 2021
Description: Taxpayers subject to New York State personal income tax who are direct partners, members or shareholders of a partnership or S corporation that elects to pay an optional pass-through entity tax under New York State Tax Law Article 24-A, add back their share of the pass-through entity tax expense at the federal level as an income modification and then take the pass-through entity tax credit. Each eligible taxpayer’s pass-through entity tax credit is equal to the taxpayer’s direct share of pass-through entity tax that was reported by the electing entity on the entity’s pass-through entity tax annual return.
42. Geothermal energy systems credit
Citation: Tax Law § 606(g-4)
Credit type: Nonrefundable
Effective date of credit: Effective for tax years beginning on or after January 1, 2022
Description: Taxpayers may claim a credit for 25% of costs related to the installation of a qualified geothermal energy system, with the credit capped at $5,000. Unused credits may be carried forward up to five years.
Qualified expenditures refer to the purchase or lease of at least 10 years of geothermal equipment installed in a residential property located in state and is the taxpayer’s residence at the time of installation. The expenses include materials, labor allocable to on-site preparation, assembly and original installation, architectural and engineering services, and designs and plans directly related to the construction or installation of the geothermal system equipment. Interest, finance charges, grants, or other costs used for any other credit cannot be used in the computation of the credit.
In the case of equipment installed in a shared residence, the credit is prorated for each taxpayer based on its share of costs for installing the system. For lease agreements, the credit may only be claimed for 15 years and the 25% limit is on the aggregate payments made under the agreement.
43. Real property tax relief credit
Citation: Tax Law § 606(e-2)
Credit type: Refundable
Effective date of credit: Effective for tax years beginning on or after January 1, 2021, and before January 1, 2024
Description: The credit is computed using the amount of real property tax which exceeds 6% of the taxpayer’s income, and a specified rate based on the taxpayer’s income. To claim the credit, the computed amount must exceed $250. The credit cannot exceed $350, no matter the amount of the computation.
To be eligible for this credit, New York State residents must have: (i) qualified gross income of $250,000 or less; (ii) owned and resided in New York State real property for more than six months; (iii) received either the STAR exemption or school tax relief credit; and (iv) paid real property taxes.