Budget brings big change to STAR Rebate program

Posted 8/21/12

ALBANY, NY — As part of the budget deal passed by Gov. Andrew Cuomo and the state legislature on April 2, the School Tax Relief (STAR) Rebate Program will undergo a significant change this year. …

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Budget brings big change to STAR Rebate program

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ALBANY, NY — As part of the budget deal passed by Gov. Andrew Cuomo and the state legislature on April 2, the School Tax Relief (STAR) Rebate Program will undergo a significant change this year. For new homeowners or for homeowners moving from one house to another, instead of getting the rebate up front when paying property taxes, residents will instead receive a tax credit to deduct from their state income tax payments.

Language in Cuomo’s budget plan said, “The STAR program is simplified by transforming the exemption into a refundable personal income tax credit, allowing school districts to collect revenue without having to wait for reimbursement from the state.”

Some lawmakers said the change would be tantamount to dismantling the popular tax-exemption program, and tried to launch a program to halt it, but it was approved as part of the budget process.

Under the STAR Rebate program the first $30,000 worth of home’s value is exempt from school taxes, and for homeowners who are 65 or older the first $60,000 worth of value is exempt. The program is open to all homeowners who earn less than $500,000 per year. Now, for homeowners who are eligible and who are already signed up for the STAR Rebate, there will be no change, but newcomers who are eligible will have to wait for the bonus until they file their state taxes to see the savings.

This will save school districts from handing out the savings first, then waiting to be reimbursed by the state. The program costs the state an estimated $3 billion per year. The typical savings for a homeowner is a few hundred dollars per dear.

Cuomo had also sought to halt the increase on the amount of STAR Rebates by capping them at this year’s rate, but the Senate and Assembly refused to go along, and so now the increase in rebates in the program is limited to 2%, the same amount as the cap on school district budgets.

State officials have said the changes will save the state some $180 million per year, but officials don’t plan to change the amount of rebates going out, and it’s not clear where the savings will come from.

Beginning with 2011-12 school tax bills, the savings resulting from the Basic or Enhanced STAR exemptions were limited to a 2% increase over the prior year.

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