State budget includes tax rebate change

NEW YORK STATE--With the official approval of the New York State 2016-17 budget Friday, April 1, state taxpayers who move will see a change in the way they receive relief for their school taxes. The School Tax Relief (STAR) Program will now be converted into a tax rebate for new homeowners. The state would previously take the amount right out of school tax bills and later reimburse the school districts.
"The change will only apply to first-time homebuyers and homeowners who move," according to the executive budget. "Under current law, school districts collect reduced revenue as a result of the STAR exemptions, and the state compensates them for the cost of the exemption."
There is no change to the amount of the STAR rebate for taxpayers, only the mechanism used to claim the rebate. However, not all representatives were on board with this latest change to the STAR Program. Assemblyman Phil Palmesano (R,C,I--Corning) previously spoke against the measure, noting the program has worked very well since it started in 1998 where it was taken right out of the school tax bills. Palmesano noted this change will be very burdensome for seniors living on a fixed income who do not file tax returns.
Once implementation is complete, the new measures are estimated to save the state some $180 million each year. All STAR-eligible homeowners with incomes at or below $500,000 who live in school districts that comply with the property tax cap will be eligible to receive the basic exemption. STAR recipients are exempt from the first $30,000 of their assessed property value. Older homeowners age 65 and over receive an enhanced exemption from the first $65,300 of assessed value.
Beginning in 2017, the program will provide property tax relief based on a percentage of a homeowner's STAR benefit, with lower incomes receiving a larger percentage. When the program is fully phased-in for benefits provided in 2019, it is estimated to provide $1.3 billion of property tax relief and an average rebate of $530. An attempt to freeze the rebate as opposed to letting it grow 2 percent a year was defeated by the state legislature.