What's happening
This bill exempts interest earned on individual retirement accounts from taxable income when determining property tax exemptions for seniors.
Why it matters
Protects more seniors from losing property tax exemptions. By excluding interest earned on IRAs from income calculations, seniors with modest retirement savings are less likely to see their total income cross the threshold that would make them ineligible for property tax relief.
Incentivizes retirement saving. This change recognizes and supports seniors who planned for retirement by saving in IRAs, ensuring they aren’t penalized for generating interest from these accounts when seeking property tax exemptions.
Potentially lowers taxable income for many seniors. For seniors who rely on IRAs for a portion of their retirement income, this exemption could significantly reduce their "countable" income, allowing more to qualify for or retain property tax breaks.
Could impact local government revenues. By broadening eligibility for property tax exemptions, municipalities might see a reduction in property tax revenue, which could affect funding for local services.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Protect Seniors’ IRA Interest
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to aging
- Referred to aging
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6270
2017-2018 Regular Sessions
IN SENATE
May 11, 2017
Introduced by Sen. SERINO -- read twice and ordered printed, and when printed to be committed to the Committee on Aging
AN ACT to amend the real property tax law, in relation to excluding interest on individual retirement accounts from taxable income for seniors
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraph (a) of subdivision 3 of section 467 of the real property tax law, as amended by chapter 259 of the laws of 2009, is amended to read as follows:
(a) if the income of the owner or the combined income of the owners of the property for the income tax year immediately preceding the date of making application for exemption exceeds the sum of three thousand dollars, or such other sum not less than three thousand dollars nor more than twenty-six thousand dollars beginning July first, two thousand six, twenty-seven thousand dollars beginning July first, two thousand seven, twenty-eight thousand dollars beginning July first, two thousand eight, and twenty-nine thousand dollars beginning July first, two thousand nine, as may be provided by the local law, ordinance or resolution adopted pursuant to this section. Income tax year shall mean the twelve month period for which the owner or owners filed a federal personal income tax return, or if no such return is filed, the calendar year. Where title is vested in either the husband or the wife, their combined income may not exceed such sum, except where the husband or wife, or ex-husband or ex-wife is absent from the property as provided in subparagraph (ii) of paragraph (d) of this subdivision, then only the income of the spouse or ex-spouse residing on the property shall be considered and may not exceed such sum. Such income shall include social security and retirement benefits, interest, dividends, total gain from the sale or exchange of a capital asset which may be offset by a loss from the sale or exchange of a capital asset in the same income tax year, net
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11702-01-7
S. 6270 2
rental income, salary or earnings, and net income from self-employment, but shall not include a return of capital, gifts, inheritances, payments made to individuals because of their status as victims of Nazi persecution, as defined in P.L. 103-286, interest earned on individual retirement accounts as defined in Title 26 of the United States Code or monies earned through employment in the federal foster grandparent program and any such income shall be offset by all medical and prescription drug expenses actually paid which were not reimbursed or paid for by insurance, if the governing board of a municipality, after a public hearing, adopts a local law, ordinance or resolution providing therefor. Furthermore, such income shall not include the proceeds of a reverse mortgage, as authorized by section six-h of the banking law, and sections two hundred eighty and two hundred eighty-a of the real property law; provided, however, that monies used to repay a reverse mortgage may not be deducted from income, and provided additionally that any interest or dividends realized from the investment of reverse mortgage proceeds shall be considered income. The provisions of this paragraph notwithstanding, such income shall not include veterans disability compensation, as defined in Title 38 of the United States Code provided the governing board of such municipality, after public hearing, adopts a local law, ordinance or resolution providing therefor. In computing net rental income and net income from self-employment no depreciation deduction shall be allowed for the exhaustion, wear and tear of real or personal property held for the production of income;
§ 2. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the real property tax law, in relation to excluding interest on individual retirement accounts from taxable income for seniors
Purpose or general idea of bill
Amends the real property tax law, in relation to excluding interest on individual retirement accounts from taxable income for seniors
Summary of provisions
Section 1 of the bill amends paragraph (a) of subdivision 3 of section 467 of the real property tax law to exempt the interest earned on individual retirement accounts from taxable income for seniors after authorization from localities.
Section 2 of the bill provides for the effective date
Justification
Pursuant to Opinions of Counsel from the Department of Taxation, a senior citizen may currently exclude from his or her income distributions from a section 401(k) plan provided that the applicant can prove that those distributions were a return of his or her contributions to the plan (SBRPS No. 112, Vol. 11). Counsel, however, clarified that the distributions attributable to the plan's earnings or interest accrued should be considered taxable income. This determination came after a request concerning how distributions from a 401(k) plan were to be treated for the purposes of determining income eligibility for the senior citizen exemption under Real Property Tax Law § 467.
While the Opinion of Counsel justifies this interpretation through prior precedent, it fails to consider the implications of interest earned on an individual retirement account, particularly with respect to the Senior Limited Income application. Importantly, earnings on individual retirement accounts are not taxable until distributed and are therefore not reported on tax returns or readily available to include in a computation of income for RPL § 467 purposes. As such, inclusion in the assessment of income for eligibility determinations not only presents assessment issues, but also inappropriately considers such funds to be accessible income for the senior.
Prior legislative history
New bill.
Fiscal implications for state and local governments
To be determined.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.