One of the most popular tax exemptions for homeowners, the School Tax Relief (STAR) program, is being adjusted by the New York State Department of Taxation and Finance.
STAR, which began in 1998 as a partial tax exemption from school taxes, provides eligible homeowners in New York State with relief on their property taxes. When the program began, New Yorkers who owned and lived in their home – whether it was a condominium, cooperative apartment, manufactured home, farm dwelling, apartment building or mixed-use property – became eligible for the STAR exemption on their primary residence.
New York State has modified the STAR Program in recent years.
The STAR exemption program was closed to any applicants purchasing a home after August 1, 2015. A new tax credit was then offered under the STAR program, allowing homeowners to receive a check in the mail to apply toward their school taxes.
What’s New for the STAR Program?
Moving forward, if you currently receive the Basic STAR exemption and your income is between $250,000-$500,000, you will now receive a check for the STAR credit instead of the reduction on your school tax bill. Homeowners who are impacted should receive a letter from the state informing them of the change.
What to Do Next?
If your income is greater than $250,000 and less than or equal to $500,000:
- Most homeowners will not need to take additional action. The letter they receive (Form RP-425-RDS) confirms that, as long as they are eligible, New York State will issue their STAR credit check before their 2019-2020 school taxes are due.
- However, some homeowners must provide additional information before the state can issue a check for the STAR credit. These individuals will receive a letter (Form RP-425-RDM) explaining how to update their registration. After the NYS Department of Taxation and Finance confirm their eligibility, a STAR credit check will be issued to the homeowner.
- Update Registration
If your income is $250,000 or less:
- If you currently receive the STAR exemption, you can choose to register for the STAR credit to receive a check instead; you may receive a greater benefit, and your savings will never be less than the STAR exemption benefit.
- Due to recent changes in the law, beginning in 2019, the value of the STAR credit savings may increase by as much as 2% each year, but the value of the STAR exemption savings cannot increase.
- Register for STAR to make the switch
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New York State will continue to offer an enhanced STAR exemption benefit for the primary residences of senior citizens (age 65 and older) with qualifying incomes. However, seniors must be registered for the Income Verification Program with the New York State Department of Taxation and Finance. Once registered, eligible seniors will automatically receive the exemption without having to apply each year with the local assessor.
If you have questions about the STAR Program or any of the latest changes, please contact the NYS Department of Taxation and Finance at 518-457-2036.