New York Expands Empire State Child Credit

Beginning in tax year 2025, New York is expanding the Empire State Child Credit as part of a broader effort to address affordability for families. The update increases the maximum benefit, removes the minimum income requirement, and adjusts the phase-out rules so more households may qualify. The State estimates say that the expansion could nearly double the average credit, from $472 to $943 per family, and increase payments for approximately 2.75 million children statewide. The changes apply to 2025 returns, and additional increases are already scheduled for tax year 2026. To help clients, prospects, and others, Dermody, Burke & Brown CPAs, has summarized the key details below.

Background

The Empire State Child Credit (ESCC) is a New York State tax credit available to eligible residents with qualifying children. It is claimed on a New York State return and can be paired with the federal Child Tax Credit.

In prior years, the credit was calculated using a formula. For example, in 2024, the ESCC generally equaled 33% of the federal Child Tax Credit calculated under 2017 rules, or $100 per child, whichever was greater. Because the federal credit was $1,000 per child under those 2017 rules, the New York credit was typically capped at $330 per child.

The credit also phased in based on earned income, which limited the benefit for some lower-income families. In addition, the phase-out reduced the credit relatively quickly once income exceeded certain thresholds.

Key Updates to the Empire State Child Credit

• Increased Credit Amounts — For tax year 2025 (filed in 2026), taxpayers may receive up to $1,000 per child under age 4 and up to $330 per child ages 4 through 16. For tax year 2026 (filed in 2027), the credit for children ages 4 through 16 increases to up to $500 per child. The $1,000 maximum for children under age 4 remains unchanged.
• Full Refundability — The credit is now fully refundable without a minimum income requirement. The prior phase-in based on earned income has been eliminated. Families may now receive the full value of the credit as a refund even if they owe little or no New York income tax.
• Revised Phase-Out Rules — The income thresholds for the full credit remain unchanged. The full benefit is available up to $110,000 for married filing jointly, $75,000 for single and head of household filers, and $55,000 for married filing separately. Above those levels, the credit is reduced by $16.50 for every $1,000 of federal adjusted gross income over the applicable threshold. Because the reduction occurs gradually, more middle-income families may qualify for a partial credit than under prior rules.

How to Claim the Credit

Taxpayers must file a New York State income tax return to claim the Empire State Child Credit. The credit is calculated and claimed using Form IT-213. To claim the credit, taxpayers must provide valid identifying information, including a Social Security Number or Individual Taxpayer Identification Number (ITIN) for themselves and each qualifying child. The child must also be claimed as a dependent on the return. This is a process your trusted tax advisor can help navigate.

Because the credit is refundable, taxpayers may receive a refund even if they do not owe New York income tax. Filing a return is required to receive the credit, including for those with little or no income.

Interaction with the Federal Child Tax Credit

The Empire State Child Credit is separate from the federal Child Tax Credit, and eligible taxpayers may claim both. For tax year 2025, the federal Child Tax Credit provides up to $2,200 per qualifying child under age 17. The full amount is generally available to taxpayers with income up to $200,000, or $400,000 for married filing jointly. If taxpayers are above those thresholds, a partial credit may be available.

Other federal tax credits, including the Child and Dependent Care Credit and the Adoption Credit, may also be available depending on eligibility and filing requirements.

Contact Us

If you have questions about the information outlined above or need assistance with another tax or accounting issue, Dermody, Burke & Brown CPAs can help. For additional information call 315-471-9171 or click here to contact us. We look forward to speaking with you soon.