How to File Form 129-86 for the STAR Exemption

The New York State School Tax Relief (STAR) program provides homeowners a benefit on their primary residence, but how this benefit is delivered has changed. The program is now administered in two ways: the STAR credit and the STAR exemption. For homeowners who receive the benefit as a direct payment, known as the STAR credit, the question of changing to an upfront reduction on their tax bill, the STAR exemption, often arises.

The STAR exemption program is not open to new applicants. Homeowners who purchased their homes after the 2015-2016 school year, or those not receiving the STAR exemption on their current property at that time, must apply for the STAR credit. Homeowners currently receiving the STAR credit cannot switch to the STAR exemption. This article explains the differences between these benefits, the eligibility requirements, and the correct application process.

Understanding the STAR Credit and Exemption

The STAR credit is issued directly to eligible homeowners by the New York State Department of Taxation and Finance. This benefit arrives as a check or direct deposit, completely separate from any property tax bills. The amount of the credit is calculated by the state, and homeowners registered for the credit receive this payment annually as long as they continue to meet the eligibility criteria.

In contrast, the STAR exemption provides the benefit as a direct reduction on a homeowner’s school tax bill. This is an upfront savings, meaning the amount of school tax due is lowered before the bill is sent. The exemption is administered by the homeowner’s local assessor, who applies the reduction to the property’s assessed value for school tax purposes. This system is now limited to homeowners who have been continuously receiving the exemption on the same property since 2015.

The main difference is the timing of the relief. Credit recipients pay their full tax bill and then get a payment from the state, while exemption recipients have their bill reduced from the start. The financial benefit for the Enhanced STAR program for seniors is the same regardless of which version they receive.

A legislative change closed the STAR exemption program to new applicants to centralize administration with the Department of Taxation and Finance. Any individual who purchased their primary residence after this change must register for the STAR credit program. The path for new homeowners is exclusively through the STAR credit registration.

Eligibility to Switch

The rules regarding movement between the STAR credit and exemption programs are definitive. Homeowners who are currently enrolled in the STAR credit program are not permitted to switch to the STAR exemption. The exemption program is effectively grandfathered for those who were enrolled prior to the cutoff.

Eligibility for the STAR exemption is limited to individuals who have continuously owned and lived in their home and received the exemption on that property since the 2015-2016 school year. If such a homeowner loses the exemption, they may be required to register for the STAR credit. The only individuals who can apply for the exemption are those seeking to restore it under specific circumstances.

Eligibility is also based on income, with different limits for the credit and exemption. For the Basic STAR benefit, the income limit for the STAR credit is $500,000. For the grandfathered Basic STAR exemption, the income limit is $250,000. Homeowners with the exemption whose income exceeds $250,000 must switch to the credit, provided their income remains $500,000 or less.

For the Enhanced STAR program, all owners must be 65 or older. To receive the benefit for the 2025-2026 school year, their 2023 income must be $107,300 or less.

Required Information and Form Completion

Since switching from the STAR credit to the exemption is not permitted, there is no form for this purpose. Form 129-86 is not the correct document for applying for or switching STAR benefits. Instead, homeowners not receiving a STAR benefit must register with the New York State Department of Taxation and Finance for the STAR credit, which is typically done online.

Before beginning the registration process, you should gather the following information:

• The full names and Social Security numbers for all owners of the property and their spouses
• The property’s address
• The date you purchased the property
• Your most recent tax return

The registration does not involve a traditional paper form. New homeowners should visit the New York State Department of Taxation and Finance website and find the STAR resource center. The online portal will guide you through the one-time registration process.

For homeowners eligible to restore a previously held STAR exemption, the correct form is Form RP-425-B for the Basic STAR Exemption, or Form RP-425-E for the Enhanced version. These forms require the property’s tax map number, which can be found on a prior tax bill. You must also provide a copy of your tax return as proof of income.

Submitting Your Application

For new applicants, the process is completed directly with the New York State Department of Taxation and Finance. After completing the online registration for the STAR credit, you will receive a confirmation from the state. There is no need to submit any documents to your local assessor.

The state will then verify your eligibility, primarily through income verification using your tax return data. If approved, you will be enrolled in the STAR credit program. The state will automatically send you a check or direct deposit for your STAR benefit each year.

For individuals eligible to file Form RP-425-B or RP-425-E to restore an exemption, the completed application must be submitted to your local assessor’s office, not the state. The application must be filed by the taxable status date, which is March 1st in most municipalities.

Once the local assessor receives your application, they will review it for completeness and eligibility. If your application is approved, the STAR exemption will appear as a direct reduction on your future school tax bills.