Low-wage NYC workers get a city tax credit up to six times bigger

If you live in New York City, earn a modest paycheck, and qualify for the federal earned income credit, the city adds its own credit on top of the state one. Until 2022 the city’s share was 5% of your federal credit, and it hadn’t gone up in almost 20 years. Now it’s between 10% and 30%, and the lowest incomes get the biggest match. The credit is refundable, so you get it even if you owe no city income tax.

You don’t apply separately. You claim it on your New York State tax return with Form IT-215, the same form you use for the state credit. Part-year residents get a share based on their income that was subject to city tax.

The change made a real difference. In the 2023 tax season, the first one under the new rates, more than 746,000 New Yorkers got the city credit, and the average credit rose from $107 to $462.

Because the city’s income tax is set in state law, the city needed Albany’s approval. Mayor Eric Adams had promised the increase during his campaign and asked state lawmakers for it in February 2022. Assemblymember Jenifer Rajkumar and state Sens. Luis Sepúlveda and Diane Savino championed the expansion in Albany. The Legislature put it in the state budget, and Gov. Kathy Hochul signed it on April 9, 2022. The city committed about $250 million a year in its budget for the bigger credit.