Income tax highlights for 2017
General changes for 2017
- Allocation of refund
Beginning with tax year 2017, there is a new refund choice. Taxpayers may direct deposit all or a portion of their personal income tax refunds to NYS 529 college savings accounts. See the instructions for new Form IT-195, Allocation of Refund, on page 36.
- Cost of living adjustment
The New York State standard deduction and tax rate schedules have been adjusted to reflect the cost of living adjustment required under the Tax Law.
- New York itemized deduction
The charitable contribution deduction limitation on the New York itemized deduction for taxpayers with New York adjusted gross income (AGI) over $10 million has been extended through tax year 2019.
- Nonqualified deferred compensation
If you were required to report certain nonqualified deferred compensation (as required under federal Public Law 110-343, Div. C, § 801(d)(2)) on your 2017 federal income tax return, or if any such amounts flowed through to you from a pass-through entity, you must mark an X in the Yes box at item D3. For more information, see the instructions for item D3 on page 14.
- New York State (NYS) source income definition
A recent law change amended and expanded the definition of NYS source income. See Form IT-203-I, page 6 for more information.
Changes to existing credits
- Excelsior jobs program tax credit
This credit has been extended through December 31, 2029. The credit is also expanded to include life science companies. See Form IT-607, Claim for Excelsior Jobs Program Tax Credit, and its instructions. For more information on program requirements, see the Empire State Development website at www.esd.ny.gov.
- Employee training incentive program (E-TIP) credit
The program has been amended to incentivize companies to include incumbent worker training as part of the expansion and retention projects, and expanded to include training for employees working in life sciences. In addition, the definition of a significant capital investment has been changed. For information about the credit, see Form IT-646, Employee Training Incentive Program Tax Credit, and its instructions.
- Empire State film production credit
This credit has been extended through December 31, 2022. See Form IT-248, Claim for Empire State Film Production Credit, and its instructions.
- Empire State film post-production credit
This credit has been extended through December 31, 2022. See Form IT-261, Claim for Empire State Film Post-Production Credit, and its instructions.
- New York youth jobs program tax credit (name change)
Due to a program name change, the credit, previously known as the urban youth jobs program tax credit, is now called the New York youth jobs program tax credit. The credit is still claimed on Form IT-635, New York Youth Jobs Program Tax Credit; the credit form’s title was updated accordingly. This credit has been extended through December 31, 2022. For information about the program, visit the NYS Department of Labor website at www.labor.ny.gov.
- Alternative fuels and electric vehicle recharging property credit
This credit has been extended through December 31, 2022. See Form IT-637, Alternative Fuels and Electric Vehicle Recharging Property Credit, and its instructions.
- STAR credit advance payment
Beginning with tax year 2017, the Tax Department can estimate STAR credit advance payment amounts to timely issue checks to property owners. Property owners who receive a notice from the department stating their estimated STAR credit advance payment check was less than the amount the property owner was entitled to will be able to claim any underpaid amount of the actual STAR credit amount on their timely-filed personal income tax returns. See new Form IT-119, STAR Credit Advance Payment Reconciliation, and its instructions.
- Clean heating fuel credit
Beginning with tax year 2017, there are changes to the credit definitions. See Form IT-241, Claim for Clean Heating Fuel Credit, and its instructions.
- Farm workforce retention credit
Beginning with tax year 2017, there is a new credit available for a farm employer or an owner of a farm employer for employing eligible farm employees. See new Form IT-647, Farm Workforce Retention Credit, and its instructions.
- NYC school tax credit (rate reduction amount)
Beginning with tax year 2017, the School Tax Reduction (STAR) Program rate reduction benefit for New York City residents with taxable income of $500,000 or less has been eliminated. Affected New York City residents who previously received the benefit of the STAR rate reduction are subject to a small increase in the city income tax rates. However, this increase in the city tax rates will be offset by an expanded New York City school tax credit. See page 30 for line 69a instructions, NYC school tax credit (rate reduction amount).
New and revised income modifications
- Distributions from an eligible retirement plan for the Lake Ontario and St. Lawrence Seaway flood relief program
A new subtraction modification is allowed for individuals whose primary residences were damaged by the 2017 flooding of Lake Ontario and the St. Lawrence Seaway. Individuals may take a subtraction modification from their federal adjusted gross income (FAGI) when using a distribution from an eligible retirement plan to pay for repairs to their primary residences. For more information, see TSB-M-17(2)I, Income Tax Relief for Individuals Affected by the Flooding of Lake Ontario and the St. Lawrence Seaway, the instructions for Form IT-225, New York State Modifications, and our website.
New Voluntary Contributions
- Veterans’ home assistance fund
Taxpayers may donate any whole dollar amount to be used for the care and maintenance of certain veterans’ homes in New York. For more information, see page 28.