BILL NUMBER: S277C
SPONSOR: GOUNARDES
 
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. Households with both 0 - 17 WFTC dependents and older dependents
would continue to receive their full EITC until year five, at which
point they would receive the more generous WFTC for dependents aged 0 -
17 and the EITC only for older dependents who are outside of the 0 - 17
WFTC qualifying ages.
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 $550 credit per child
Year two: maximum of $800 credit per child, increased by all inflation
since 2023
Year three: maximum of $1,000 credit per child, increased by all
inflation since 2023
Year four: maximum of $1,200 per child, increased by all inflation since
2023
Year five: maximum of $1,600 per child, increased by all inflation since
2023
The credit would then phase out at a rate of 2%, once a filer reaches
the following incomes: In year one: $75,000 for single filers and
$110,000 for married filing jointly
In year two: $65,000/$110,000
In year three: $55,000/$110,000
In year four: $45,000/$90,000
In year five: $25,000/$50,000, increased by all inflation since 2023
The credit would be universal, however, starting in year two, never able
to be reduced below $100 per child for any taxpayer.
The end result is a credit that ranges from $500 to $1,600 plus
inflation 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.
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 $100 credit per child regardless of income
Additionally, the new WFTC will be paid out quarterly, providing fami-
lies 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 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:
2024: S277B - Reported to Finance
2023: S277A - Reported to Finance
2022: S9610 - Referred to Rules
 
FISCAL IMPLICATIONS:
To be determined
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S277: 606 tax law, 606(d) tax law, 606(c-1) tax law
S277A: 606 tax law, 606(d) tax law, 606(c-1) tax law
S277B: 606 tax law, 606(d) tax law, 606(c-1) tax law
S277C: 606 tax law, 606(d) tax law, 606(c-1) tax law