New York School Tax Relief (STAR) Credit

Quick Facts

• Benefit type: Refundable state credit that reimburses homeowners for a portion of school property taxes.
• Who can claim: New York homeowners who use the property as their primary residence, meet income limits, and register with the Department of Taxation and Finance.
• Benefit levels: Basic STAR is available to households with income under $500,000; Enhanced STAR provides larger relief for seniors 65+ with income under the annual threshold (about $98,700 for 2024–25).
• How paid: New York sends a check or direct deposit each fall rather than reducing your school tax bill directly (unless you are still receiving the older exemption).
• Why it matters: STAR reduces the annual school tax burden, keeping homeownership affordable for middle-income families and seniors.

Program Overview

The School Tax Relief (STAR) program has assisted New York homeowners since the 1990s. Initially structured as a property tax exemption, the state now delivers benefits through a refundable credit. Eligible homeowners receive a check each fall after school tax bills are issued. By shifting to a credit, New York can verify income annually and adjust benefits more accurately.

The program has two tiers:

• Basic STAR: For owner-occupied primary residences with household income under $500,000.
• Enhanced STAR: For seniors 65 or older whose household income is below the annual limit (indexed each year) and who meet residency requirements. Enhanced STAR offers significantly larger rebates.

Homeowners who applied for STAR before 2016 may still receive it as an exemption on their school tax bill. However, the state strongly encourages moving to the credit to receive automatic increases when school districts raise tax rates.

Eligibility Requirements

Basic STAR

1. Ownership and residency: You must own a one-, two-, or three-family home, condominium, cooperative unit, manufactured home, or farm dwelling that is your primary residence.
2. Income: Combined income of the owners and resident spouses must be $500,000 or less based on the second prior tax year (e.g., 2023 income for the 2025 credit).
3. Registration: New applicants must register online or by phone with the Department of Taxation and Finance. Once registered, the state reviews income annually—no need to reapply unless requested.

Enhanced STAR

1. Age: At least one owner (or spouse) must be 65 by December 31 of the year the benefit applies.
2. Income: Household income must be below the annual limit (approximately $98,700 for 2024–25; updated each year).
3. Residency: Property must be your primary residence. You may only claim Enhanced STAR on one property in or out of New York.
4. Application/renewal: Enhanced STAR requires annual income verification. Most participants enroll in the Income Verification Program (IVP), allowing the state to pull tax data automatically.

Additional considerations

• Co-ops and condos: Cooperative shareholders apply via the managing agent, who passes the benefit to shareholders. Condo owners apply individually.
• Trust-owned homes: Beneficiaries who live in the home can claim STAR if they are trustees or the trust allows.
• Married couples with multiple homes: If spouses own separate homes, only one property can receive Basic STAR unless legally separated. Enhanced STAR applies to the primary home of the qualified senior.

Benefit Calculation

The credit equals the amount of the STAR savings you would have received as an exemption, adjusted for annual increases set by law (up to 2% growth). It is based on the school district’s tax rate and the applicable STAR savings amount for your municipality.

• Basic STAR: Provides a credit equal to the school district tax savings up to a statewide maximum. In high-tax districts, this may exceed $1,000.
• Enhanced STAR: Offers significantly higher savings reflecting the senior exemption level. Many downstate districts see credits above $1,700.

New York publishes yearly STAR benefit tables showing the exact savings for each town and school district. Because the credit is tied to local tax rates, amounts vary widely.

Application Process

1. Gather documentation: Social Security numbers, federal and state tax returns, proof of residency, and property information (tax map number, school district).
2. Register online: Visit the STAR registration site and complete the form. Provide property details, owner information, and income figures from the requested tax year. Alternatively, call 518-457-2036.
3. Receive confirmation: The state issues a confirmation number and mails a letter verifying your eligibility status. Keep this with your records.
4. Enroll in IVP (Enhanced STAR): If applying for Enhanced STAR, submit Form RP-425-IVP to your local assessor. Once in IVP, you do not need to reapply annually unless income exceeds the limit.
5. Await payment: Credits are issued after school districts finalize tax rates, typically between September and December. Payment arrives via mailed check unless you opt into direct deposit (available starting 2024).
6. Update information: If you move or experience significant life changes (marriage, divorce, death), update your registration promptly to avoid delays.

Documentation Checklist

• Most recent federal and New York State tax returns (Form IT-201).
• Social Security numbers for all owners and spouses.
• Property tax bill or assessment notice showing parcel identification.
• Proof of residency (driver’s license, voter registration, utility bills).
• Birth certificate or passport for seniors applying for Enhanced STAR.
• Trust documents or life estate agreements if ownership is held through a trust or life estate.

Deadlines

• Registration deadline: Generally March 1, aligning with the taxable status date in most communities. Some municipalities have different deadlines (check with your assessor).
• Enhanced STAR paperwork: If not enrolled in IVP, submit Form RP-425-E before March 1 annually.
• Late registration: If you miss the deadline, register immediately. The state may still issue the credit later in the year, but you could miss a payment cycle.

Interaction with Other Programs

• Property Tax Relief Credit: Separate from STAR, this credit is income-based and may provide additional relief. You can receive both.
• Local exemptions: STAR can be combined with veterans, agricultural, or senior citizen exemptions. However, the combination cannot exceed the property’s assessed value.
• Mortgage escrow: If your mortgage lender escrows taxes, the STAR credit check comes to you directly. Consider applying it to your escrow account or loan principal.
• Reverse mortgages: Homeowners with reverse mortgages remain eligible as long as they occupy the home and meet income requirements.

Strategies to Maximize Benefits

1. Register early: Do not wait until March. Early registration ensures the state has time to verify income and issue payment on schedule.
2. Monitor income: For households near the income limit, consider timing capital gains or Roth conversions outside the STAR reference year to stay eligible.
3. Use direct deposit: Starting 2024, you can opt into direct deposit via your online services account, reducing the risk of lost checks.
4. Combine with the Enhanced STAR savings: If you turn 65 mid-year, consult your assessor about qualifying for the upcoming school year. Some married couples can qualify if one spouse turns 65 by year-end.
5. Keep records: Store confirmation letters, tax returns, and assessor correspondence. This helps resolve discrepancies quickly.

Common Pitfalls

• Failing to update ownership changes: When property ownership changes (due to sale, divorce, death), you must re-register. Otherwise, payments may be suspended.
• Income misreporting: STAR uses the federal adjusted gross income minus taxable IRA distributions. Review instructions carefully to avoid exceeding limits due to miscalculations.
• Assuming exemption continues automatically: Homeowners moving within New York must register anew. Benefits do not transfer automatically.
• Ignoring mail from Taxation and Finance: Letters requesting income verification or additional information have strict deadlines. Nonresponse can cancel your benefit.

Example Scenarios

• First-time homeowner: Priya purchases a home in Albany in July 2024. She registers for Basic STAR immediately. Her household income is $145,000. She receives a $780 STAR credit check in October 2025, which she applies toward winter heating costs.
• Senior downsizing: Lorraine, age 67, sells her large home and buys a condo in Rockland County. She files Form RP-425-IVP with the local assessor. With income of $62,000, she qualifies for Enhanced STAR and receives a $1,650 credit.
• Married couple with separate properties: Alex and Jamie each own a condo purchased before marriage. They cannot both claim Basic STAR. They decide to keep STAR on the home they occupy and remove the benefit from the other property.

Frequently Asked Questions

• Do I need to register every year? No. Once registered, the state reviews income automatically. Update your information if you move or experience life changes.
• Can I track my payment? Yes. Create an Online Services account at tax.ny.gov to view benefit status and payment history.
• What if my check is lost? Contact the STAR hotline to request a replacement. Provide the check number if available.
• Can renters apply? No. STAR is only for homeowners. Renters should explore the NYC Rent Freeze or state renter credits.
• Does STAR affect capital gains when selling the home? No. The credit does not impact basis or capital gains calculations.

Additional Resources

• STAR Credit Program
• STAR Income Verification Program (Form RP-425-IVP)
• Local Assessor Lookup
• Property Tax Relief Credit
• Senior Citizen Homeowners’ Exemption