6 tax deductions every New York resident needs to know

During those dreary times when we wait for spring, it’s nice to have tax season to keep us out of the blues. But folks, it’s that time again. But rather than approaching taxes with trepidation, I’d like to think of it more like an upcoming Easter egg hunt. How much tax relief can I get this year?

There are many great federal tax deductions to uncover, but don’t forget that your state may have a few gems, too. For example, New York State residents may want to explore some of these potentially lucrative tax credits.

1. Empire State Child Exemption

The Empire State Child Credit is a refundable tax credit for eligible New York State residents who qualify for the federal child tax credit. Previously, eligible children had to be at least 4 years old and under 17 years old. Starting in 2023, children under the age of 4 will also be eligible.

If you are a one-year resident of New York State (or married), have a qualifying child, and receive the federal child tax credit (or qualify through your income), you are eligible for the Empire State Child Credit. . The amount of your state credit depends on whether you apply for federal credit.

Refunds available: yes.

2. Child and Dependent Care Credit

This is New York State’s version of the federal credit. The federal child and dependent care tax credit is for workers who pay for child or dependent care. If you qualify for federal credit, you can apply for state credit. The amount of your credit will depend on your income and expenses.

Refunds available: Full refund for full-time state residents, partial refund for part-time residents, non-refundable for non-residents.

3. Earned income deduction

Another federal-state credit, the New York State Earned Income Tax Credit, is open to those who qualify and claim the federal Earned Income Tax Credit. The program is designed for low-income single people and moderate-income families (the 2023 eligibility table is up to $17,640 for a single filer and $46,560 for a single filer with one child).

Refunds available: Full refund for full-time state residents, partial refund for part-time residents, non-refundable for non-residents.

4. Clean Heating Fuel Credit

There are a variety of federal and state credits you can claim to use or upgrade to certain “clean” energy sources. The New York State Clean Heating Fuel Credit is specifically for people (or businesses) purchasing bioheating fuel used for space heating or water heating for residential purposes.

For purposes of this credit, bioheating fuel is defined as “a fuel consisting of biodiesel or renewable hydrocarbon diesel blended with conventional home heating oil that meets the specifications of ASTM International Designation D396 or D975.” Bioheating fuels must contain at least 6 percent biodiesel per gallon to qualify, but “fuels consisting of renewable hydrocarbon diesel blended with conventional home heating oil may also qualify.”

Refunds available: yes.

5. Solar energy system equipment deduction

The push for solar is real at both the federal and state levels. The New York State Solar Energy System Equipment Credit is available to anyone who has purchased or leased solar energy system equipment, or has entered into a written agreement specifically to purchase power generated by a solar energy system that they do not own.

Specifically, the system must be used to generate energy for “heating, cooling, hot water, or residential electricity” in residences within New York State. Credits can be up to 25% of eligible expenses, up to $5,000.

Refunds available: There is no refund, but the deduction in excess of tax due may be extended for up to five years.

6. STAR Credits

The School Tax Relief (STAR) credit is designed to provide property tax relief to eligible New York State homeowners. In fact, if you qualify for the credit, the state will send you a check once a year that you can use to pay your school taxes. (Starting in 2023, points can also be accumulated through direct deposit instead of check.)

Previously, this was called a STAR exemption, which simply reduced a school’s tax bill. People who already have a STAR exemption will continue to receive it, but new homeowners will receive a credit instead.

Unlike other credits on this list, the STAR Credit is not an income tax deduction. Register once and your credit will be automatically sent to you each year you qualify.

The Beauty of Tax Deductions

One of the best things about all these credits is this: credits. Unlike deductions, which only reduce the amount of your income that is taxable, tax credits come right out of your final tax bill.

Even better, some income tax deductions are refundable. In this case, not only can you reduce your tax bill to zero, but you could also potentially receive a refund thanks to a refundable tax credit.

This is one of the many reasons why it’s important to know all of the potential tax breaks you may be entitled to before filing your return. If you’re worried you might be missing out, find some reputable tax software to help you, or go the analog route and hire a real accountant. Meeting face-to-face (or face-to-face on screen) with a professional can be a great way to learn more about your finances. Happy reporting!

NOTE: Our top-tier cashback cards now offer a 0% introductory APR through 2025.

This credit card isn’t just good. A truly outstanding card that our experts use personally. Features a long 0% intro APR period, cash back rates of up to 5%, and no annual fee!

Click here to read the full review for free and apply in just 2 minutes.