Relates to the term "income" for purposes of the school tax relief exemption

BILL NUMBER:S4595

Title of bill

An act to amend the real property tax law, in relation to the term "income" for purposes of the school tax relief exemption

Purpose

To expand the categories of retirement income which are not included in the income calculation for purposes of qualifying for the STAR exemption.

Summary of provisions

Section 1: Amends subparagraph 2 of paragraph b, subdivision 4 of section 425 of the real property tax law excluding from the income calculation a distribution from an account established under section 401-K or 403-B of the United States Internal Revenue Code of 1986 as amended or a simplified employee pension plan established pursuant to the United States Internal Revenue Code of 1986 as amended.

Justification

When the STAR real property tax relief law was introduced, the calculation of adjusted gross income for qualification allowed an individual to exempt their distribution from an individual retirement account. However, distributions from other tax qualified accounts under the Internal Revenue Code were not excluded. Consequently, many individuals who have saved substantial amounts of money in individual retirement accounts are allowed to exclude distributions those while individuals who may have saved in plans established under section 401K, 403-B, etc., are required to include those distributions in their calculation of income. In some circumstances, this statutory scheme has an unfair impact on individuals who have saved under particular retirement accounts at the expense of those who saved under other types of retirement accounts.

Prior legislative history

S.7472 of 2014

Fiscal implications

To be determined

Effective date

This act shall take effect January 1, following the date upon which it becomes law.