Changes to the senior citizens exemption and the exemption for persons with disabilities and limited incomes in the 2023-2024 Enacted State Budget
Part K of Chapter 59 of the Laws of 2023 amended the senior citizens exemption (RPTL §467) and the exemption for persons with disabilities and limited incomes (RPTL §459-c) in the following three respects:
- It redefines what is considered income for purposes of the exemptions.
- It clarifies which income tax year applies when determining income eligibility.
- It replaces gender-specific language with gender-neutral language. (For example, it changes husband and wife to married couple.)
The measure made similar changes to New York City’s senior citizens rent increase exemption (SCRIE) and disability rent increase exemption (DRIE) authorized by RPTL §§ 467-b and 467-c.
The changes take effect for exemption applications on rolls with taxable status dates on and after October 1, 2023. In other words, they’ll first be effective for the 2024 assessment cycle.
The new income definition simplifies the application and administration of the exemptions.
Note: The previous income definition continues to be in place for 2023 exemption applications. To review the previous income inclusions and exclusions, see RP-467-I and RP-459-c-I, the 2023 instructions for §§ 467 and 459-c, respectively.
Beginning with 2024 assessment rolls, the new law replaces the prior definition of income with a simpler definition that is similar to (but not the same as) STAR.
The starting point for the new income definition is the Federal Adjusted Gross Income (FAGI) reported on the applicant’s income tax return. There are five possible adjustments to FAGI.
|Adjustment||Addition to or deduction from FAGI||Local Option?|
|taxable IRA distributions*||deduction||option not to deduct|
|Social Security benefits not included in FAGI||addition||option not to add|
|medical and prescription drug expenses not covered by insurance||deduction||option to deduct (same as current law)|
|tax exempt interest and dividends||addition||no|
|loss limitations (see below)||addition||no|
* The STAR definition of income is FAGI minus taxable IRA distributions.
Most of this data should appear on the applicant’s federal income tax return. The main exception is for unreimbursed medical and prescription drug expenses. In localities that have opted to allow a deduction for unreimbursed medical and prescription drug expenses, an applicant who wishes to claim the deduction will have to document the amounts paid and the offsetting insurance coverage (or lack of it).
Note: For those who don’t file income tax returns, we’re developing an income worksheet similar to the STAR worksheet for the seniors and disability exemptions.
If the applicant’s FAGI was reduced by business or other losses, those losses may be limited for exemption purposes.
The applicant cannot include more than $3,000 for any category of loss (e.g., Form 1040, Schedules C, D, E or F).
In addition, the applicant cannot include more than $15,000 in total losses.
Nursing home expenses
Note also that, as before, when an owner is absent from the residence while receiving health-related care as an inpatient of a residential health care facility, any income accruing to that person shall be counted only to the extent that it exceeds the amount paid by such owner, spouse, or co-owner for care in the facility. This restriction is not subject to local option.
The income tax year requirement was enacted in 2021, and it was clarified by the 2023-2024 Enacted Budget.
When determining income eligibility for §467 and §459-c, the applicable income tax year depends on when taxable status date (TSD) occurs:
- If TSD is before April 15, use the second-latest calendar year.
- If TSD is on or after April 15, use the latest calendar year.
For example, for 2024 exemption eligibility:
- use 2022 income if TSD is 3/1/2024, but
- use 2023 income if TSD is 5/1/2024.
The new law also clarifies the rule for fiscal year filers (those that file income tax returns based on a year that starts on a date other than January 1). Those filers are required to use the latest return. Note: This is an uncommon situation because the vast majority of individual tax returns are filed on a calendar year basis.