BILL NUMBER: S4425
SPONSOR: FAHY
 
TITLE OF BILL:
An act to amend the tax law, in relation to providing for the advance
payment of the earned income tax credit
 
SUMMARY OF PROVISIONS:
Section 1 amends subsection (d) of section 606 of the Tax Law to expand
the state-level Earned Income Tax Credit (EITC). Specifically, the EITC
is improved by:
- Increasing the phaseout amount set in IRC § 32(b)(2)(A) for filers
with one or more dependent from the $11,610* to $24,960
-*Note that while $11,610 is the baseline phaseout referenced in this
part of the federal code, this amount has been indexed to inflation
since the federal Tax Reform Act of 1986 and so the phaseout for these
filers is actually $21,560 as of 2023
-The higher $24,960 baseline phaseout amount for these filers would be
adjusted for inflation moving forward as well
-Joint filers are subject to a higher phaseout threshold (equal to
thephaseout threshold for single filers plus $5,000 per IRC §
32(b)(2)(8), or $6,560 as of 2023 indexed to inflation)
-Increasing the credit amount of the state-level EITC from 30% of
thefederal EITC to 35% in tax year 2025 and 40% in tax year 2026 and
thereafter
-For EITC filers with no dependents, the phase-in percentage is doubled
from 7.65% of the filer's income to 15.3%
-For EITC filers with no dependents, the phase-in amounts set in IRC
§ 32(b)(2)(A) are increased to match those of filers with one dependent,
increasing from $4,220 (or $7,840 as of 2023 indexed to inflation) to
$6,330 (or $11,750 as of 2023 indexed to inflation)
-The phaseout amounts set in IRC § 32(b)(2)(A) for EITC filers with
nodependents are also increased to match those of filers with one
dependent, increasing from $5,280 (or $9,800 as of 2023 indexed to
inflation) to $11,610 (or $21,560 as of 2023 indexed to inflation)
-The age range. for EITC filers with no dependents as referenced in IRC§
32(c)(1)(A)(ii)(11) is expanded from ages 25 to 64 to ages 19 to 64
-Taxpayers shall be able to claim the EITC irrespective of the factthat
they may not have a Social Security number as prescribed in IRC § 32(m)
-Individuals age of 65 or older shall also be able to claim the EITC,
irrespective of the age limitations in 32(c)(1)(A)(ii)(III)
Section 2 adds new section 679 to the Tax Law. This section provides for
the advance payment of the earned income credit in four annual incre-
ments: the first three payments shall be 20% of the anticipated credit,
with the final, fourth payment adjusted to match the actual credit based
on the filer's income for that year. Such payments shall, to the extent
practicable, be made available via direct deposit and via electronic
benefit transfer (EBT) card. Section 3 sets the effective date.
 
JUSTIFICATION:
The Earned Income Tax Credit has consistently proven one of the most
effective methods by which governments can reward work and alleviate
poverty. This legislation builds on the success of the New York Earned
Income Credit by increasing the value of the credit, expanding who is
eligible to receive the credit, and creating an option for recipients of
the credit to receive payments quarterly. The EITC is designed to reward
work, its value growing with a recipient's earnings. In the 1990s the
EITC was credited as being the single largest factor encouraging single
mothers to return to work, and research has shown that lifting the
income of low-income families while a child leads to better health
outcomes, more educational exposure and higher earnings in adulthood.
This bill recognizes that many middle-class families are on the brink of
financial catastrophe and expands eligibility for the EITC to provide a
measure of financial security for those making more than poverty wages.
This bill also expands eligibility for those who do not have children,
those aged 19-24, as well as those aged 65 and older, and those who do
not have a Social Security number but pay taxes with an Individual
Taxpayer Identification Number (ITIN). These measures address important
inadequacies in the federal EITC and will provide a measure of financial
security for a large swatch of low-income New Yorkers.
 
LEGISLATIVE HISTORY:
2023: S5573 - Referred to Budget and Revenue
2021-2022: 5537 - Referred to Budget and Revenue
2020: 58670 - Referred to Rules
 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to all taxable
years beginning on or after January 1st, 2025.

Statutes affected:
S4425: 606 tax law, 606(d) tax law