Last updated on October 19th, 2020
High taxes in New York State have long been vexing residents, particularly those at retirement age. In nearly every category – real estate taxes, income tax, and even health insurance – New York residents regularly shell out more cash than those who live in other states. Desperate for some relief from the financial squeeze, many residents are choosing to spend their retirement years in more tax-friendly locales. In fact, between 2000 and 2010, 3.4 million residents left the Empire State making it the largest migration exodus of any state, according to the Tax Foundation.
To stem the damage, New York lawmakers have been making slow but steady progress on the issue of tax reform – but the state still has a long way to go if it wants to remain competitive with other states. Here are some of the most significant recent changes to date.
Property Tax Cap
A much-discussed property tax levy growth for local governments, which took effect in 2012, will be capped at 1.84% for 2018. The property tax cap for school districts was set at 1.26% for the 2017-18 fiscal year. The tax cap limits a local government’s overall growth in the property tax levy to 2%, or the rate of inflation, whichever is less.
Reduced Income Tax Rates
In 2018, residents will begin to see their personal income tax rates reduced on a gradual basis. The major changes are as follows:
- The 6.45% personal income tax rate ($40,000–150,000 bracket) will be reduced by 0.12% each year until it reaches 5.5% in 2025; and
- The 6.65% personal income tax rate ($150,000–300,000 bracket) will be reduced by 0.08% until it reaches 6% in 2025.
Enhanced STAR
The New York State School Tax Relief Program has been offering exemptions for school district property taxes since 1997. Although it used to be offered in the form of a discount on a resident’s tax bill, taxpayers now must pay the full bill up front and then receive a rebate check the following year. The enhanced STAR program is specifically geared toward senior citizens who own their homes, use them as a primary residence, and make less than $86,000. Those who are approved for Enhanced STAR receive an exemption on the first $65,300 of their home value.
At RBT CPAs, LLP, we are no strangers to the complex and ever-changing tax laws of New York. Our locations in the Hudson Valley and the New York Metropolitan area positions us squarely in one of the most highly taxed areas of the nation. With our guidance, we aim to help clients take advantage of all credits and lower rates available to them, increasing the likelihood that they will choose to spend their retirement years here.