Since the first of the month, some New Yorkers looking at their paychecks have noticed a marked increase in the amount of personal income tax being deducted.
For Nikki, who works in tech and asked that we leave out her last name, the amount works out to at least $20 more a month. She reached out to Gothamist, writing, "Seems like a big story that most people are missing!"
Online, others registered their displeasure, and asked for help from anyone they could think of. De Blasio, for instance:
— victoria (@BonaFideVic) July 14, 2017
And of course our country's fearless leader.
@realDonaldTrump i just paid $900 in income tax...i'm an INTERN in NYC..$170 of that was NY withholding tax! Bogus libs! taxation is theft!!
— melina (@melina_210) July 14, 2017
Nikki is right that there is very little easily readable information out there about this apparent tax increase. So we asked around, and the good news is that New York City taxpayers, though they are indeed having more income tax withheld from their paychecks, are supposed to get the difference back. The bad news is that the money isn't supposed to come until next tax season, and then only in the form of a state tax credit.
Instead of a rate reduction on the NYC PIT, NYC residents receive a tax credit against their STATE personal income taxes. Thanks!
— Senator Brad Hoylman (@bradhoylman) July 8, 2017
Let's explain. Since 1998, New York City residents making less than $500,000 have benefited from the School Tax Relief, or STAR program. Meant to shift the burden of funding schools from the district level to the state, the program primarily benefits homeowners who live in the city and pay less in school taxes on their houses. However, the STAR program also reduces the personal income tax rate for city dwellers except for the ultra-rich. As of July 1st, though, the city's personal income tax rate for non-rich New Yorkers (about 3.6 percent for people making the per capita income of $64,900) has reverted to pre-1998 levels, with the state agreeing to pick up the difference in the form of a state income tax credit that New Yorkers will receive at filing time.
Follow that? In other words, on paper, people will be paying about 0.17 to 0.23 percent more in taxes (about $136 more annually for someone making $64,900) paycheck by paycheck, but come tax season, they'll owe that much less in state income taxes. This bit of rearranging could help the city keep up with mushrooming pension costs, which take up an ever-increasing large share of the city's personal income tax revenue.
More practically speaking, New Yorkers shrieking in horror at their paychecks needn't worry about having to file special paperwork to get the new tax credit owed to them, according to state Department of Taxation and Finance spokesman James Gazzale. "It should automatically happen," he said. "You won't see it until you file your tax returns, assuming you do it before April of next year."
However, there's another new tax that began this month that New Yorkers will only get back in very special circumstances, and in the less tangible form of societal well-being. On my check stub this appears as a couple bucks designated "NY Disability PFL." This is the deduction for the state's paid family leave law. Signed last year and effective beginning next year, paid family leave is supposed to be funded by employees through these deductions. It will cover a portion of new parents' salaries, for eight weeks at first, and ultimately for up to 12 weeks.