The various tax credits listed in this chapter were enacted by either federal, state or local laws. The various tax credits are grouped by category as follows (additional details are found below):
Tax Credits for Low Income Households
- Earned Income Tax Credits – a refundable federal tax credit for working people with low and moderate incomes. Residents of New York State and New York City may also claim the New York State and New York City earned income credits. To qualify taxpayers must meet certain income requirements and is available to households with children and without children, although households with children have a higher credit amount.
- Non-Custodial Parent Earned Income Credit (NCP EIC) – is a New York State tax credit that supports low-income working non-custodial parents by supplementing their earnings. To qualify, the non-custodial parent must be at least 18 years old, be a resident of NYS, and have not claimed the NYS earned income credit (EIC). In addition, the non-custodial parent must have a child support order in effect for a child (or children) under 18 years old.
Education Tax Credits
- American Opportunity Tax Credit (AOTC) – a federal tax credit that allows students who are taxpayers or their parents the opportunity to lower the cost of attending college by reducing the amount of a filer’s income tax. To qualify for the AOTC, an individual must be an eligible student. This can be either the taxpayer, spouse of the taxpayer, or a dependent on the taxpayer’s tax return who has qualified education expenses. The taxpayer’s modified adjusted gross income (MAGI) must be below the program’s guidelines.
- Lifetime Learning Credit (LLC) – is a federal tax credit that offsets the costs of higher education by reducing the amount of a filer’s income tax. To qualify for the LLC, an individual must be an eligible student. This can be either the taxpayer, spouse of the taxpayer, or a dependent on the taxpayer’s tax return who has qualified education expenses. The taxpayer’s MAGI must be below the program’s guidelines.
Child Tax Credits
- Child Tax Credit (CTC) – The Child Tax Credit (CTC) is federal tax credit worth up to $2,000 for each dependent child under 17 and offsets the household’s tax liability for the year. Any remaining amount after the household’s tax liability has been offset may be available as a refund through the Additional Child Tax Credit (ACTC).
- Credit for Other Dependents – is a federal tax credit signed into law as part of the 2017 Tax Cuts and Jobs Act and is in effect for tax years 2018 through 2025. The credit provides a credit for certain dependents that don’t qualify for the Child Tax Credit, such as qualifying children age 17 or older, adult dependents, and dependents who have an ITIN.
- New York’s Empire State Child Credit – is a refundable credit for New York State residents with children who qualify for the Federal Child Tax Credit who are at least four years of age but under 17.
- Child & Dependent Care Tax Credit (CDCC) – is a federal non-refundable credit for working people who pay for child or dependent care and is limited to the amount of the worker’s income tax liability.
- New York State also provides a CDCC. The credit is a percentage of the federal credit. The precise percentage will depend on the claimant’s income. Unlike the federal benefit, however, the state credit can be issued as a refund.
- The New York City CDCC is for families who pay child care expenses for children under the age of four. The credit is a percentage of the New York State credit. The city credit can be used against taxpayer New York City tax liability; any amount left after the tax has been credited will be refunded to the claimant.
Tax Credits for Homeowners or Renters
- Senior Citizens Homeowners’ Exemption (SCHE) – is a New York State tax credit program that provides a property tax exemption of up to 50% of the amount of property taxes to senior homeowners age 65 and over.
- Disabled Homeowners Exemption (DHE) – is a New York State tax credit program that provides a property tax exemption of up to 50% of the amount of property taxes for homeowners with disabilities.
- School Tax Assessment Relief (STAR) – provides New York State homeowners with partial exemptions from school property taxes. There are two levels of benefits: Basic STAR and the Enhanced STAR.
- NYS Real Property Tax Credits – is a benefit for New York State income tax filers who own or rent property and have a household gross income of $18,000 or less and pay either real property taxes or rent their residence(s).
- Enhanced Real Property Tax Credit – is available to NYC residents who have a household gross income of less than $200,000 and pay either real property taxes or rent for their residences. The credit can be as much as $500.
Other Tax Credits
- Retirement Savings Contribution Credit – is a federal non-refundable tax credit available to workers who make eligible contributions to a qualified IRA, 401 (K), or certain other retirement plans. The credit is a percentage of the qualifying contributions, with the highest rate for taxpayers with the least amount of income.
How the Tax Credits Coordinates with Public Benefit Programs
Tax credits typically will not count as income or as resources when determining eligibility for or benefit amount of any federally-funded public benefit program, such as SSI, TANF, SNAP benefits, Medicaid, as well as state and local programs that are partially funded by federal dollars. In addition, any federal tax refund saved by the tax filer will not count against the resource limits of any federally funded public benefit program for 12 months after the refund is received.