A04022 Summary:

BILL NOA04022B
 
SAME ASSAME AS S00277-B
 
SPONSORHevesi
 
COSPNSRKelles, Cunningham, Burdick, Aubry, Shimsky, Sillitti, Colton, Raga, Walker, Forrest, Bores, Davila, Simon, Otis, Reyes, Cruz, Seawright, Carroll, Shrestha, Kim, Bichotte Hermelyn, Epstein, Tapia, Lunsford, Gonzalez-Rojas, Brown K, Alvarez, O'Donnell, Taylor, De Los Santos, Darling, Simone, Ardila, Rosenthal L, Bendett, Levenberg, Gallahan, Mamdani, Septimo, Mitaynes, Steck, Benedetto, Rozic, Gibbs
 
MLTSPNSR
 
Amd §§606 & 616, Tax L
 
Provides for a working families tax credit; directs quarterly prepayment of the credit; provides for a sliding reduction in the credit for incomes which exceed a certain threshold.
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A04022 Actions:

BILL NOA04022B
 
02/09/2023referred to ways and means
02/17/2023amend and recommit to ways and means
02/17/2023print number 4022a
01/03/2024referred to ways and means
01/09/2024amend and recommit to ways and means
01/09/2024print number 4022b
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A04022 Committee Votes:

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A04022 Floor Votes:

There are no votes for this bill in this legislative session.
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A04022 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A4022B
 
SPONSOR: Hevesi
  TITLE OF BILL: An act to amend the tax law, in relation to a New York state working families tax credit   PURPOSE OR GENERAL IDEA OF BILL: To create the New York State Working Families Tax Credit   SUMMARY OF PROVISIONS: Section one of this bill phases out the State Earned Income Tax Credit (EITC) over the course of four years for taxpayers who will instead receive the new, Working Families Tax Credit (WFTC) created in section three of the bill. The EITC is maintained for those with older children and relatives who don't qualify for the WFTC as well as for childless filers. Section two eliminates the Empire State Child Tax Credit, which will be replaced by the new WFTC created in section three of the bill. Section three phases in the Working Families Tax Credit over five years as follows: The maximum WFTC shall be available to all tax filers making less than $25,000, or $50,000 if married filing jointly. The maximum credit amount would be phased in over the course of four years as follows: Year one: maximum of $800 credit per child Year two: maximum of $1,100 credit per child Year three: maximum of $1,350 credit per child Year four: maximum of $1,600 per child, increased by all inflation since 2023 and indexed for inflation moving forward The credit would then phase out at a rate of 2%, once a filer reaches the following incomes: In year one: $65,000 for single filers and $130,000 for married filing jointly In year two: $55,000/$110,000 In year three: $45,000/$90,000 In year four: $25,000/$50,000, indexed to inflation The credit would be universal, however, never able to be reduced below the following dollar amounts for any taxpayer: In year one: $150 per child In year two: $250 per child In year three: $400 per child In year four: $500 per child In year five: $500 per child indexed to inflation The end result is a credit that ranges from $500 to $1,600 for all filers with qualifying children, defined as ages zero to 17, phasing out at a rate of 2% for filers making above $25,000 or $50,000 if married filing jointly. A tax filer would be able to claim the WFTC with either a Social Security number or an Individual Taxpayer Identification Number, and the credit would be fully refundable, meaning still disbursed as an overpayment if the credit exceeds the amount of tax owed. In the fourth year succeeding the effective date of the bill, when virtually all aspects of the WFTC are fully phased in and the existing, annual EITC is fully phased out, the WFTC would be disbursed by the Department of Taxation and Finance in quarterly installments, with the first three payments equaling 20% (so 60% in total) of the anticipated credit due. The final 40% would be paid after the end of the tax year and adjusted based on the latest filing information. The WFTC would be made available via direct deposit and electronic bene- fits transfer (EBT) card, and treated in the same manner as the EITC in that it would not be considered income for the purposes of determining benefits eligibility. Section four of this bill amends section 616 of the Tax Law to eliminate the dependent exemption for filers with children who will now qualify for the new, more generous WFTC. Section five sets an immediate effective date.   JUSTIFICATION: The expanded federal child tax credit provided for in the American Rescue Plan Act of 2021 successfully lifted 2.9 million children out of poverty, driving the rate of child poverty to fall to a record low. Despite its remarkable efficacy, the program was not renewed. New York must address the federal government's shortfall and provide support for working families in our state. The proposed NYS Working Families Tax Credit (WFTC) will streamline the state Earned Income Tax Credit (EITC), Empire State Child Tax Credit (ESCC), and the dependent exemption (DE) to provide working families with increased support while making the most of our state's tax system by streamlining duplicative, overlapping tax credits. The NYS WFTC fills many of the gaps of the current state EITC and CTC, such as: *Including children aged 17 *Including families regardless of citizenship status *Eliminating the phase-in, allowing those with the lowest income to receive the largest credit The new system also increases the credit provided to all families by: *Increasing the maximum credit to $1,600 per child *Providing a $500 credit per child regardless of income *Eliminating the cap on the number of children eligible to receive a credit Additionally, the new NYS WFTC will be paid out quarterly, providing families with four payments per year instead of one lump sum annually. Those with older children and dependent relatives who fall outside of the range of the WFTC and are currently eligible for the EITC and dependent exemption would continue to be able to claim them. The benefits of the proposed WFTC are numerous. It is estimated that the new credit will result in a 13.4% reduction in children under the age of 18 living in poverty, with a 19.6% reduction for those under 18 living in deep poverty. It will also lead to increased educational attainment and employment opportunities for these children, benefitting not only those individuals but their communities and the state at large.   PRIOR LEGISLATIVE HISTORY: 2023: S277A - Reported to Finance 2022: S9610 - Referred to Rules   FISCAL IMPLICATIONS: To be determined   EFFECTIVE DATE: This act shall take effect immediately.
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A04022 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         4022--B
 
                               2023-2024 Regular Sessions
 
                   IN ASSEMBLY
 
                                    February 9, 2023
                                       ___________
 
        Introduced by M. of A. HEVESI, KELLES, CUNNINGHAM, BURDICK, AUBRY, SHIM-
          SKY,  SILLITTI,  COLTON,  RAGA, WALKER, FORREST, BORES, DAVILA, SIMON,
          OTIS -- read once and referred to the Committee on Ways and  Means  --
          committee  discharged,  bill amended, ordered reprinted as amended and
          recommitted to said committee -- recommitted to the Committee on  Ways
          and  Means  in  accordance  with  Assembly Rule 3, sec. 2 -- committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee
 
        AN ACT to amend the tax law, in relation to a  New  York  state  working
          families tax credit
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Subsection (d) of section 606 of the tax law is amended  by
     2  adding a new paragraph 9 to read as follows:
     3    (9)  Commencing in the taxable year next succeeding the effective date
     4  of subsection (c-2) of this section, the portion of  the  earned  income
     5  credit  attributable to qualifying children, as defined in paragraph one
     6  of subsection (c-2) of this section, shall be reduced over the course of
     7  four years as follows:
     8    (A) In the  first  taxable  year  succeeding  the  effective  date  of
     9  subsection  (c-2)  of  this  section,  the  applicable percentage of the
    10  earned income credit allowed under section thirty-two  of  the  internal
    11  revenue code for the same taxable year, as described in paragraph one of
    12  this subsection, shall be reduced to twenty-one;
    13    (B)  In  the  second  taxable  year  succeeding  the effective date of
    14  subsection (c-2) of this  section,  the  applicable  percentage  of  the
    15  earned  income  credit  allowed under section thirty-two of the internal
    16  revenue code for the same taxable year, as described in paragraph one of
    17  this subsection, shall be reduced to fifteen;
    18    (C) In the  third  taxable  year  succeeding  the  effective  date  of
    19  subsection  (c-2)  of  this  section,  the  applicable percentage of the
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02008-07-4

        A. 4022--B                          2
 
     1  earned income credit allowed under section thirty-two  of  the  internal
     2  revenue code for the same taxable year, as described in paragraph one of
     3  this subsection, shall be reduced to ten;
     4    (D)  In  the  fourth  taxable  year  succeeding  the effective date of
     5  subsection (c-2) of this section and each taxable year  thereafter,  the
     6  applicable  percentage of the earned income credit allowed under section
     7  thirty-two of the internal revenue code for the same  taxable  year,  as
     8  described in paragraph one of this subsection, shall be reduced to zero.
     9    The  reduction  described  in  this  paragraph shall apply only to the
    10  portion of a taxpayer's earned income credit  that  is  attributable  to
    11  qualifying  children  as defined in paragraph one of subsection (c-2) of
    12  this section. A taxpayer shall continue to be allowed the earned  income
    13  credit  for the portions of such credit attributable to another qualify-
    14  ing child, as defined in 26 USC  §152(c),  or  qualifying  relative,  as
    15  defined  in 26 USC §152(d), who do not meet the definition of qualifying
    16  child in paragraph one of subsection (c-2) of this section.
    17    § 2. Paragraph 1 of subsection (c-1) of section 606 of the tax law, as
    18  amended by section 1 of part HH of chapter 56 of the laws  of  2023,  is
    19  amended to read as follows:
    20    (1)  [A] For taxable years prior to the first of January next succeed-
    21  ing the effective date of subsection (c-2) of this section,  a  resident
    22  taxpayer  shall  be  allowed  a  credit  as provided herein equal to the
    23  greater of one hundred dollars times the number of  qualifying  children
    24  of  the  taxpayer  or  the applicable percentage of the child tax credit
    25  allowed the taxpayer under section twenty-four of the  internal  revenue
    26  code  for  the  same  taxable  year for each qualifying child. Provided,
    27  however, in the case of a taxpayer whose federal adjusted  gross  income
    28  exceeds the applicable threshold amount set forth by section 24(b)(2) of
    29  the  Internal Revenue Code, the credit shall only be equal to the appli-
    30  cable percentage of the child tax  credit  allowed  the  taxpayer  under
    31  section  24  of the Internal Revenue Code for each qualifying child. For
    32  the purposes of this subsection, a qualifying child shall be a child who
    33  meets the definition of qualified  child  under  section  24(c)  of  the
    34  internal  revenue  code. The applicable percentage shall be thirty-three
    35  percent. For purposes of this subsection, any reference to section 24 of
    36  the Internal Revenue Code shall be a reference to  such  section  as  it
    37  existed immediately prior to the enactment of Public Law 115-97.
    38    §  3. Section 606 of the tax law is amended by adding a new subsection
    39  (c-2) to read as follows:
    40    (c-2) New York state working families  tax  credit.  (1)  Definitions.
    41  (A)  "Adjusted for inflation" shall mean that the commissioner increases
    42  the dollar amount of a credit or adjusted gross income,  as  applicable,
    43  by  an amount equal to such dollar amount multiplied by the cost-of-liv-
    44  ing adjustment determined under 26 USC § 1 (f)(3), for the calendar year
    45  in which the taxable year being referenced begins.
    46    (B) "Adjusted for all inflation since two thousand twenty-three" shall
    47  mean the commissioner  increases  the  dollar  amount  of  a  credit  or
    48  adjusted  gross  income, as applicable, by an amount equal to the sum of
    49  all cost-of-living adjustments calculated and published by the  internal
    50  revenue  service  pursuant  to  26  USC §1(f)(3) since calendar year two
    51  thousand twenty-three.
    52    (C) "Qualifying child" or "qualifying children" shall mean as  defined
    53  in  26 USC §24(c)(1) except that such term shall also include qualifying
    54  children who have not attained the age of eighteen.
    55    (2) (A) For taxable years beginning on and after the first of  January
    56  next  succeeding  the  effective  date  of  this  subsection, a resident

        A. 4022--B                          3
 
     1  taxpayer with a New York state adjusted gross income of less than  twen-
     2  ty-five  thousand  dollars  in  the  case  of  an  individual who is not
     3  married; fifty thousand dollars in the case of a joint return; or  twen-
     4  ty-five  thousand  dollars  in the case of a married individual filing a
     5  separate return shall be allowed a credit equal to:
     6    (i) In the first taxable year succeeding the effective  date  of  this
     7  subsection, eight hundred dollars per qualifying child;
     8    (ii)  In the second taxable year succeeding the effective date of this
     9  subsection, one thousand one hundred dollars per qualifying child;
    10    (iii) In the third taxable year succeeding the effective date of  this
    11  subsection,  one thousand three hundred and fifty dollars per qualifying
    12  child;
    13    (iv) In the fourth taxable year succeeding the effective date of  this
    14  subsection  and  each  taxable year thereafter, one thousand six hundred
    15  dollars per qualifying child, provided, however, that the dollar  amount
    16  herein prescribed shall be adjusted for all inflation since two thousand
    17  twenty-three in the fourth taxable year succeeding the effective date of
    18  this subsection and each taxable year thereafter.
    19    (B)  The  amount  of  the  credit per child shall be reduced by twenty
    20  dollars for each one thousand dollars by which the taxpayer's  New  York
    21  state adjusted gross income exceeds:
    22    (i)  In  the  first taxable year succeeding the effective date of this
    23  subsection, sixty-five thousand dollars in the case of an individual who
    24  is not married, one hundred thirty thousand dollars in  the  case  of  a
    25  joint  return,  or  sixty-five thousand dollars in the case of a married
    26  individual filing a separate return;
    27    (ii) In the second taxable year succeeding the effective date of  this
    28  subsection, fifty-five thousand dollars in the case of an individual who
    29  is  not married, one hundred ten thousand dollars in the case of a joint
    30  return, or fifty-five thousand dollars in the case of a married individ-
    31  ual filing a separate return;
    32    (iii) In the third taxable year succeeding the effective date of  this
    33  subsection, forty-five thousand dollars in the case of an individual who
    34  is  not  married, ninety thousand dollars in the case of a joint return,
    35  or forty-five thousand dollars in  the  case  of  a  married  individual
    36  filing a separate return; and
    37    (iv)  In the fourth taxable year succeeding the effective date of this
    38  section and each taxable year thereafter, twenty-five  thousand  dollars
    39  in  the case of an individual who is not married, fifty thousand dollars
    40  in the case of a joint return, or twenty-five thousand  dollars  in  the
    41  case  of a married individual filing a separate return, provided, howev-
    42  er, that the dollar amount  herein  prescribed  shall  be  adjusted  for
    43  inflation  in  the  fourth taxable year succeeding the effective date of
    44  this subsection and each taxable year thereafter.
    45    (C) Provided, however, that the amount of the credit  shall  never  be
    46  reduced below the following amounts:
    47    (i)  In  the  first taxable year next succeeding the effective date of
    48  this subsection, one hundred fifty dollars per qualifying child;
    49    (ii) In the second taxable year succeeding the effective date of  this
    50  subsection, two hundred fifty dollars per qualifying child;
    51    (iii)  In the third taxable year succeeding the effective date of this
    52  subsection, four hundred dollars per qualifying child;
    53    (iv) In the fourth taxable year succeeding the effective date of  this
    54  subsection, five hundred dollars per qualifying child; and
    55    (v)  In  the  fifth taxable year succeeding the effective date of this
    56  subsection and each taxable year thereafter, five  hundred  dollars  per

        A. 4022--B                          4
 
     1  qualifying  child,  provided,  however,  that  the  dollar amount herein
     2  prescribed shall be adjusted for inflation in  the  fifth  taxable  year
     3  succeeding  the  effective date of this subsection and each taxable year
     4  thereafter.
     5    (D)  Such resident taxpayer must provide the social security number or
     6  individual taxpayer identification number for each qualifying  child  in
     7  order to receive the credit described in this subsection.
     8    (3)  If the amount of the credit allowed under this subsection for any
     9  taxable year shall exceed the taxpayer's tax for such year,  the  excess
    10  shall  be treated as an overpayment of tax to be credited or refunded in
    11  accordance with the provisions of section six hundred eighty-six of this
    12  article, provided, however, that no interest shall be paid thereon.
    13    (4) In the case of spouses who file a joint federal  return,  but  who
    14  are  required  to  determine their New York taxes separately, the credit
    15  allowed pursuant to this subsection  may  be  applied  against  the  tax
    16  imposed on either or divided between them as they may elect.
    17    (5)  Commencing  in  the  fourth taxable year succeeding the effective
    18  date of this subsection, the commissioner shall provide for the  prepay-
    19  ment  of the working families credit under this subsection to qualifying
    20  taxpayers.   Four advanced payments shall be  made  to  such  qualifying
    21  taxpayers.    An  estimated annual tax credit shall be determined by the
    22  commissioner in advance of the first payment and  shall  be  subject  to
    23  adjustment due to changes in employment or family status over the course
    24  of  the year. The first three advanced payments shall be made during the
    25  taxable year and shall be twenty percent of the anticipated credit.  The
    26  fourth  advanced payment shall be made after the end of the tax year and
    27  shall be adjusted to match the actual credit due. Such  payments  shall,
    28  to  the extent practicable, be made available via direct deposit and via
    29  electronic benefit transfer (EBT) card. The commissioner  shall  provide
    30  information  on  the  availability  of  advanced payments of the working
    31  families credit to tax preparers, accountants,  and  organizations  that
    32  assist  individuals  in  tax  preparation.  Such  information  shall  be
    33  distributed to qualifying taxpayers. If a taxpayer establishes that they
    34  are requesting and receiving payments under this paragraph in good faith
    35  by  establishing  that  they  properly  claimed  payments   under   this
    36  subsection  in  the  prior  year  and  that  they have not experienced a
    37  substantial change in circumstances such that  they  have  a  reasonable
    38  expectation  of  eligibility in the current year, then they shall not be
    39  held responsible for an incorrect prepayment/refund amount.
    40    (6) Notwithstanding any provision of law to the contrary, the refunda-
    41  ble credit and its payment authorized under  this  subsection  shall  be
    42  treated  in  the same manner as the federal Earned Income Tax Credit and
    43  shall not be considered as assets, income,  or  resources  to  the  same
    44  extent  the  credit  and its payment would be disregarded pursuant to 26
    45  U.S.C. § 6409 and the general welfare doctrine for purposes of determin-
    46  ing eligibility for benefits or assistance, or the amount or  extent  of
    47  those  benefits or assistance, under any state or local program, includ-
    48  ing  benefits  established  under  section  ninety-five  of  the  social
    49  services law.
    50    §  4. Section 616 of the tax law, as amended by chapter 28 of the laws
    51  of 1987, subsection (b) as amended by chapter 760 of the laws  of  1992,
    52  is amended to read as follows:
    53    §  616. New York exemptions of a resident individual. (a) General. For
    54  taxable years beginning after nineteen hundred eighty-seven, a  resident
    55  individual shall be allowed a New York exemption of one thousand dollars
    56  for  each  exemption  for which [he is] they are entitled to a deduction

        A. 4022--B                          5
 
     1  for the taxable year under  section  one  hundred  fifty-one(c)  of  the
     2  Internal  Revenue  Code;  and  for  taxable  years beginning in nineteen
     3  hundred eighty-seven, a resident individual other than a taxpayer  whose
     4  federal  exemption  amount is zero shall be allowed a New York exemption
     5  of nine hundred dollars for each exemption for which [he  is]  they  are
     6  entitled  to  a  deduction  for  the taxable year for federal income tax
     7  purposes.
     8    (b) [Husband and wife] Spouses.  If the New York income  taxes  of  [a
     9  husband  and  wife] spouses are required to be separately determined but
    10  their federal income tax is determined on a joint return, each  of  them
    11  shall be separately entitled to the New York exemptions under subsection
    12  (a)  of  this section to which each would be separately entitled for the
    13  taxable year if their federal income taxes had been determined on  sepa-
    14  rate returns.
    15    (c)  Commencing in the taxable year next succeeding the effective date
    16  of subsection (c-2) of section six hundred six of this article, a  resi-
    17  dent  individual  shall  not  be allowed the exemption described in this
    18  section for  any  qualifying  child  as  defined  in  paragraph  one  of
    19  subsection  (c-2) of section six hundred six of this article. A resident
    20  individual shall continue to be allowed the exemption described in  this
    21  section,  however, for other qualifying dependents, as defined in 26 USC
    22  § 152(a), who do not meet the definition of qualifying  child  in  para-
    23  graph  one  of subsection (c-2) of section six hundred six of this arti-
    24  cle.
    25    § 5. This act shall take effect immediately.
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A04022 LFIN:

 NO LFIN
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