Who Is Eligible for the $550 Tax Credit?
The "$550 tax credit" commonly refers to a 2022 NYS homeowner rebate. This article explains the specific criteria and mechanics of this one-time state program.
The tax credit many people search for as the “$550 tax credit” was a specific, one-time payment from New York State, not a recurring federal benefit. This payment was the New York State (NYS) Homeowner Tax Rebate Credit (HTRC), which was issued only in 2022 to provide property tax relief to eligible homeowners. This credit is no longer available.
Who Was Eligible for the 2022 NYS Homeowner Tax Rebate Credit?
To qualify for the Homeowner Tax Rebate Credit in 2022, a New York resident had to meet several criteria related to income, property ownership, and other state tax relief programs.
A homeowner’s federal adjusted gross income (AGI) had to be $250,000 or less for the 2020 tax year. An individual must have also owned their primary residence and received the 2022 School Tax Relief (STAR) credit or exemption. The STAR program is a separate New York State benefit providing a partial exemption from school property taxes.
Finally, the homeowner’s school tax liability for the 2022–2023 school year had to be greater than their STAR benefit. This ensured the rebate went to those who still had an outstanding school tax burden after other credits were applied.
Credit Calculation and Delivery
The amount of the Homeowner Tax Rebate Credit was not a uniform $550. The payment was calculated as a percentage of the homeowner’s 2022 School Tax Relief (STAR) benefit, with the percentage varying based on income and the type of STAR benefit received.
For example, homeowners outside of New York City with the Enhanced STAR benefit received a credit equal to 66% of their STAR savings. For those with the Basic STAR benefit, the credit ranged from 18% to 163% of their STAR savings, depending on their income. By law, the minimum credit issued was $100.
Eligible homeowners did not need to apply for the credit. The state tax department identified qualified individuals using 2022 STAR program data and 2020 income tax filings. Checks were mailed directly to homeowners, with most sent in the fall of 2022.
Tax Implications of the Rebate
The tax treatment of the rebate check depended on an individual’s federal tax situation. For the vast majority of recipients who claim the standard deduction on their federal income tax return, the rebate was not considered taxable income. This is because the payment is treated as a reduction of the property taxes paid.
The situation is more nuanced for taxpayers who itemize their deductions on their federal return. If a homeowner itemized and claimed a deduction for state and local taxes (SALT), which includes property taxes, the rebate could be considered taxable income. This is based on the tax benefit rule, which states that if you receive a refund for an expense you deducted in a prior year, you must include the refund in income.
The Homeowner Tax Rebate Credit was not subject to New York State income tax. Recipients did not need to report the payment as income on their state tax returns, regardless of whether they itemized or took the standard deduction. This ensured the full amount of the rebate provided direct financial relief.