The School Tax Relief (STAR) program is a New York State initiative that provides property tax relief to homeowners by shifting a portion of school district funding from local property taxes to the state budget. This page covers CBC’s work on the program’s annual costs, the distribution of aid across school districts of varying wealth, the impact of reclassifying benefits as income tax credits, and proposals for program reform or elimination.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
The state should reallocate School Tax Relief (STAR) funding proportional to Foundation Aid to ensure aid is better targeted based on student needs and local wealth.
Lawmakers should target School Tax Relief (STAR) program funds based on district need rather than the current design that favors wealthier districts.
The State should eliminate the STAR program to better allocate State resources to where they are needed most.
The State should reallocate the $3.3 billion in annual STAR funding proportional to the current Foundation Aid formula to shift resources to lower-wealth districts.
The State should eliminate the School Tax Relief (STAR) program to better allocate State resources to where needed most.
Key Data
In August 2024, the CBC noted that the STAR program shifts $3.3 billion of education funding from locally raised property tax revenue to the State each year through homeowner exemptions or credits.
For the 2024-25 school year, the CBC estimated that school districts in the bottom three wealth deciles receive $501 million in STAR aid, while those in the top three wealth deciles receive approximately $942 million.
Writing in July 2024, the CBC highlighted that the program pays around $2,000 per student in wealthy counties like Putnam, Nassau, and Westchester, but as little as $500 per student in Jefferson County.
In March 2024, the CBC projected that STAR program spending would decrease by 3.2% from $3,436 million in school year 2023-24 to $3,325 million in school year 2024-25.
In October 2021, the CBC reported that the off-budget costs of STAR conversions were projected to grow from $1,297 million in fiscal year 2021 to $2 billion by fiscal year 2025.
New York State's per-student school spending is the highest in the nation, with the state's portion of funding—which includes the School Tax Relief (STAR) program—growing significantly since the 2020-21 school year. Despite this increased investment, student performance remains average, indicating a need for improved oversight and accountability rather than continued increases in school aid.
The School Tax Relief (STAR) program currently shifts $3.3 billion in education funding annually, but its design disproportionately benefits wealthier districts rather than those with the greatest need. Reallocating these funds proportional to Foundation Aid would significantly redistribute resources, doubling aid to the lowest-wealth districts while reducing funding for the wealthiest.
Recommendations related to School Tax Relief (STAR)
The state should reallocate School Tax Relief (STAR) funding proportional to Foundation Aid to ensure aid is better targeted based on student needs and local wealth.
Lawmakers should target School Tax Relief (STAR) program funds based on district need rather than the current design that favors wealthier districts.
Key Data
$3.3 billion
— Annual amount of education funding shifted from locally-raised property tax revenue to the State by the STAR program.
$501 million
— Amount of STAR funding received by districts in the bottom three deciles of wealth last year.
$942 million
— Amount of STAR funding received by districts in the top three deciles of wealth last year.
$1 billion
— Amount of aid the bottom three deciles would receive if STAR funding were reallocated proportional to Foundation Aid.
$1,674
— Average increase in per-student funding for districts in the lowest wealth decile if STAR funding were reallocated.
$1,157
— Average decrease in per-student funding for districts in the top wealth decile if STAR funding were reallocated.
The School Tax Relief (STAR) program disproportionately benefits wealthier districts because its value is tied to property values and tax rates, rather than student need. Reallocating the $3.3 billion in annual STAR funding proportional to the Foundation Aid formula would significantly shift resources to lower-wealth districts, doubling aid for the bottom 30 percent of districts while cutting aid to the wealthiest.
Recommendations related to School Tax Relief (STAR)
The State should eliminate the STAR program to better allocate State resources to where they are needed most.
The State should reallocate the $3.3 billion in annual STAR funding proportional to the current Foundation Aid formula to shift resources to lower-wealth districts.
Key Data
$3.3 billion
— Annual amount of School Tax Relief (STAR) funding that could be reallocated proportional to the Foundation Aid formula.
$501 million
— Current annual STAR aid received by the 201 lowest-wealth districts (bottom 30 percent).
$1 billion
— Projected annual STAR aid for the 201 lowest-wealth districts if funds were reallocated proportional to the Foundation Aid formula.
$942 million
— Current annual STAR aid received by the 203 wealthiest districts (top 30 percent).
$336 million
— Projected annual STAR aid for the 203 wealthiest districts if funds were reallocated proportional to the Foundation Aid formula.
$1,674
— Average increase in per-student STAR funding for districts in the lowest wealth decile if reallocated proportional to the Foundation Aid formula.
The School Tax Relief (STAR) program is a regressive policy that disproportionately benefits wealthier school districts by providing more funding per student to areas with higher property values while excluding renters. Eliminating this program would allow the state to redirect billions of dollars toward districts with the greatest need rather than subsidizing wealthier communities.
Recommendations related to School Tax Relief (STAR)
The State should eliminate the School Tax Relief (STAR) program to better allocate State resources to where needed most.
Key Data
$3.3 billion
— Estimated cost of the STAR program for the upcoming year.
$2,000
— Amount paid per student in relatively wealthy counties like Putnam, Nassau, and Westchester.
$500
— Amount paid per student in Jefferson County.
$38.6 billion
— Total funding for Foundation Aid, expense-based aids, and the STAR program for the upcoming school year.
The School Tax Relief (STAR) program, which costs $3 billion annually, disproportionately benefits homeowners in wealthier districts while excluding renters and should be eliminated to better allocate state resources. Redirecting these funds would allow the state to address more pressing fiscal or programmatic needs rather than subsidizing property values in affluent areas.
Recommendations related to School Tax Relief (STAR)
The state should eliminate the School Tax Relief (STAR) program to better allocate resources to where they are needed most.
Key Data
$3 billion
— Annual cost of the School Tax Relief (STAR) program.
$2,000
— Amount provided per student in wealthy counties like Putnam, Nassau, and Westchester through the STAR program.
$500
— Amount provided per student in Jefferson County through the STAR program.
New York State's school aid, including the School Tax Relief (STAR) program, continues to grow despite the need for spending moderation. The state should consider eliminating the STAR program, which currently allocates nearly 40 percent more funding per student to high-wealth districts than to low-wealth districts.
Recommendations related to School Tax Relief (STAR)
The State should eliminate the School Tax Relief (STAR) program, a property-tax-relief initiative that results in increased funding for wealthier districts.
The State should consider eliminating the STAR program as part of broader efforts to seek additional savings from other sources.
Key Data
$3,436 million
— Total cost of the School Tax Relief (STAR) program in school year 2023-24.
$3,325 million
— Total cost of the School Tax Relief (STAR) program in school year 2024-25.
$1,885
— Funding per student allocated by the STAR program to high-wealth districts.
$1,355
— Funding per student allocated by the STAR program to low-wealth districts.
40 percent
— Amount more in funding per student that the STAR program allocates to high-wealth districts compared to low-wealth districts.
New York State has utilized accounting maneuvers, such as shifting School Tax Relief (STAR) benefits from property tax exemptions to personal income tax credits, to obscure the true size of the budget and spending growth. These shifts effectively move costs off-budget, complicating the state's fiscal picture as it faces a projected $3.5 billion fiscal cliff by 2025.
Key Data
$778 Million
— STAR program costs shifted off-budget in fiscal year 2018.
$938 Million
— STAR program costs shifted off-budget in fiscal year 2019.
$1,280 Million
— STAR program costs shifted off-budget in fiscal year 2020.
$1,297 Million
— STAR program costs shifted off-budget in fiscal year 2021.
$1,486 Million
— Projected STAR program costs shifted off-budget in fiscal year 2022.
$1,667 Million
— Projected STAR program costs shifted off-budget in fiscal year 2023.
New York State has increasingly shifted School Tax Relief (STAR) benefits from direct state-funded exemptions to personal income tax credits, effectively moving these costs off-budget. This accounting maneuver, alongside other payment delays and deferrals, has obscured the true rate of state spending growth, which reached 3.9 percent in fiscal year 2020.
Key Data
$2,014 Million
— Projected STAR Actions (off-budget) for fiscal year 2024.
$1,843 Million
— Projected STAR Actions (off-budget) for fiscal year 2023.
$1,666 Million
— Projected STAR Actions (off-budget) for fiscal year 2022.
$1,494 Million
— Projected STAR Actions (off-budget) for fiscal year 2021.
$1,280 Million
— Actual STAR Actions (off-budget) for fiscal year 2020.
$938 Million
— Actual STAR Actions (off-budget) for fiscal year 2019.
New York State has reclassified School Tax Relief (STAR) benefits from a state-funded property tax exemption to a personal income tax credit, a maneuver that obscures the true growth of state spending. This accounting shift results in a reported decrease in State Operating Funds spending, with the adjustment for the STAR conversion reaching $1.24 billion in fiscal year 2020.
Key Data
$1.24 billion
— The adjustment to reported State Operating Funds spending for the School Tax Relief (STAR) conversion in fiscal year 2020.
$937 million
— The adjustment to reported State Operating Funds spending for the School Tax Relief (STAR) conversion in fiscal year 2019.
$778 million
— The adjustment to reported State Operating Funds spending for the School Tax Relief (STAR) conversion in fiscal year 2018.
The School Tax Relief (STAR) program, which aims to lower local property tax burdens, provides disproportionately more aid to wealthier districts than to poorer ones, compounding existing inequities. Eliminating this program could reduce state costs by $3.3 billion annually, offering a potential, albeit partial, funding source for a state takeover of the Medicaid local share.
Recommendations related to School Tax Relief (STAR)
The state should eliminate the School Tax Relief (STAR) program to reduce state costs by $3.3 billion annually and help fund a state takeover of the Medicaid local share.
Policymakers should couple the elimination of the STAR program with a state takeover of the local Medicaid share to create an equitable, if partial, financing option.
The state should combine the elimination of STAR with other measures, such as state efficiencies and a sales tax intercept, to create a design that can gain widespread support for eliminating the Medicaid local share.
Key Data
$3.3 billion
— Annual state cost reduction from the elimination of the School Tax Relief (STAR) program.
$814 million
— Annual state cost reduction in New York City from the elimination of the STAR program.
$2.5 billion
— Annual state cost reduction in the rest of the state from the elimination of the STAR program.
20 years
— Duration the state has administered the School Tax Relief (STAR) program to reduce local tax burdens.
The state budget has increasingly relied on accounting shifts and reclassifications to artificially comply with a self-imposed 2 percent spending growth cap, obscuring the true rate of expenditure growth. One such maneuver involves transitioning new School Tax Relief (STAR) recipients to a personal income tax benefit structure, which reduces reported State Operating Funds spending by $862 million in fiscal year 2019.
Key Data
$862 million
— The amount by which State Operating Funds spending is reduced in fiscal year 2019 due to the transition of new School Tax Relief (STAR) recipients to a personal income tax benefit.
$84 million
— The increase in the reduction of State Operating Funds spending in fiscal year 2019 compared to the prior year resulting from the School Tax Relief (STAR) benefit transition.
New York legislative proposals are currently tracking bills that would expand the School Tax Relief (STAR) property tax exemption to include real property owned by small businesses with 100 or fewer employees. These measures aim to provide tax relief to smaller commercial entities as part of broader economic development initiatives.
The New York State government has shifted the School Tax Relief (STAR) program from a State Operating Funds (SOF) expense to a personal income tax credit to artificially lower the appearance of spending growth. This accounting change excludes $827 million in fiscal year 2018 and $938 million in fiscal year 2019 from SOF spending, despite taxpayers receiving the same net benefit.
Key Data
$827 million
— Amount excluded from State Operating Funds (SOF) spending in fiscal year 2018 due to the shift of the School Tax Relief (STAR) program to a personal income tax credit.
$938 million
— Amount excluded from State Operating Funds (SOF) spending in fiscal year 2019 due to the shift of the School Tax Relief (STAR) program to a personal income tax credit.
The state budget's reported spending growth of 2 percent is misleading because it excludes significant shifts in accounting, such as reclassifying the School Tax Relief (STAR) program from a spending program to a tax credit. This accounting change alone accounted for $827 million in adjustments in fiscal year 2018, obscuring the true rate of state spending growth.
Recommendations related to School Tax Relief (STAR)
The State should ensure that when accounting methodologies are changed, such as reclassifying the School Tax Relief (STAR) program from a spending program to a tax credit, adjustments are made to spending growth calculations to avoid misleading impressions of expenditure decreases.
Key Data
$191 million
— STAR adjustments shifted out of State Operating Funds spending in fiscal year 2017.
$827 million
— STAR adjustments shifted out of State Operating Funds spending in fiscal year 2018.
The School Tax Relief (STAR) program provides significant financial benefits to school districts, with $1.5 billion of the $3.3 billion distributed in fiscal year 2014-15 going to the wealthiest five deciles. These benefits are disproportionately higher for wealthier districts, with an average per-pupil benefit of $1,663 compared to $1,314 for the poorest districts.
Key Data
$3.3 billion
— Total STAR provided to school districts in FY 2014-15.
$1.5 billion
— Amount of STAR provided to school districts that went to the wealthiest five deciles in FY 2014-15.
$1,663
— Average STAR benefit per pupil among the wealthiest five deciles.
$1,314
— Average STAR benefit per pupil among the poorest decile.
$1,741
— Average STAR benefit per pupil for districts receiving no Foundation Aid under the revised formula.
The School Tax Relief (STAR) program is a poorly designed initiative that provides excessive benefits to wealthy taxpayers. Freezing the program's benefits is a necessary step toward addressing its flaws, though full repeal remains the preferred course of action.
Recommendations related to School Tax Relief (STAR)
While the School Tax Relief (STAR) program should be repealed, freezing the benefit will stem the growth of this poorly targeted program and is a step in the right direction.
On February 22, 2017, New York State Budget Director Robert Mujica presented highlights from the New York State Executive Budget for Fiscal Year 2018 to the Citizens Budget Commission.
New York State's fiscal plan uses the conversion of School Tax Relief (STAR) property tax exemptions into personal income tax credits to artificially reduce reported state spending by $277 million in fiscal year 2018. This accounting maneuver shifts the benefit mechanism without changing the net value for taxpayers, effectively masking the true growth of state operating funds.
Key Data
$277 million
— The amount of state spending 'saved' in fiscal year 2018 by converting New York City STAR benefits to a personal income tax credit.
$352 million
— The projected 'savings' from the STAR conversion in fiscal year 2019.
$367 million
— The projected 'savings' from the STAR conversion in fiscal year 2020.
$382 million
— The projected 'savings' from the STAR conversion in fiscal year 2021.
The New York State Fiscal Year 2018 Executive Budget utilizes budgetary gimmicks to maintain a spending growth rate below 2 percent, including the conversion of $277 million in School Tax Relief (STAR) benefits into personal income tax credits. These accounting shifts, which also include moving state employee salaries to the capital budget, obscure the true state of operating expenditures and impair fiscal transparency.
Key Data
$277 million
— The amount of School Tax Relief (STAR) benefits being converted to personal income tax credits to keep state operating funds spending below a 2 percent growth rate.
The fiscal year 2017 New York State budget lacks transparency and fiscal discipline, failing to implement necessary reforms such as freezing the poorly targeted School Tax Relief (STAR) program. While the budget avoids shifting certain costs to New York City, it increases capital spending on various initiatives without addressing long-term debt implications.
Recommendations related to School Tax Relief (STAR)
The State should implement necessary reforms, including freezing the poorly targeted School Tax Relief (STAR) program.
The School Tax Relief (STAR) program, which costs taxpayers approximately $3.4 billion annually, is considered a poorly designed initiative that should be reformed. Proposed changes include freezing benefit levels and converting the property tax exemption into a personal income tax credit to improve transparency and prevent improper benefit claims.
Recommendations related to School Tax Relief (STAR)
The state should freeze STAR benefits at current levels to stem the growth of this poorly targeted program.
The state should convert the property tax exemption into a personal income tax (PIT) credit to allow property taxpayers to see changes in their school district’s tax levy more clearly.
The state should convert the property tax exemption into a personal income tax (PIT) credit to provide an administrative mechanism to prevent taxpayers from receiving the STAR benefit on multiple homes or when they are not primary residents of the State of New York.
Key Data
$3.4 billion
— Annual cost of the STAR program to state taxpayers.
This school year New York State will spend $23.5 billion on aid to school districts, accounting for 25 percent of the state-funded operating budget. The State’s role in K-12 public education is critical to offsetting disparities in local wealth and student need, yet numerous problems remain in the state school…
New York's new property tax relief rebate program is flawed because it excludes certain homeowners and renters while disproportionately benefiting wealthier households through its link to the School Tax Relief (STAR) program. This costly initiative relies on projected budget surpluses that are unlikely to materialize given the state's existing out-year budget gaps and the difficulty of constraining spending growth.
Key Data
$1,359
— Maximum annual STAR savings in Babylon, Suffolk County.
$551
— Annual STAR savings in Tonawanda, Erie County.
$1.3 billion
— Annual cost of the new property tax relief rebate program when fully implemented.
10 percent to 85 percent
— Range of rebate shares based on STAR savings for eligible households by 2019.
The School Tax Relief (STAR) program, which costs $3.4 billion annually, is poorly targeted because payments are often unrelated to income and benefit wealthier communities more. Reforms are needed to better target benefits to those in need, such as providing tax credits for new homeowners and disqualifying high-income New York City taxpayers.
Recommendations related to School Tax Relief (STAR)
The Executive Budget improves the program by providing a tax credit for new homeowners, so taxpayers bear the full burden of their school taxes directly, and school districts gradually lose the state subsidy.
The program should disqualify taxpayers in New York City making more than $500,000 and freeze the exemption benefit.
Additional reforms to STAR could shrink and convert it to a circuit breaker program to provide more targeted relief.
Key Data
$3.4 billion
— Annual cost of the School Tax Relief (STAR) program.
$500,000
— Income threshold for New York City taxpayers to be disqualified from the STAR program.
$1.7 billion
— Cost of the proposed property tax relief 'circuit breaker' credit when fully phased in, which could serve as an alternative to STAR.
The School Tax Relief (STAR) program, which costs $3.4 billion, is being modified in the fiscal year 2016 Executive Budget to better target benefits by providing tax credits for new homeowners and eliminating eligibility for New York City taxpayers earning over $500,000. These changes aim to improve the effectiveness of the program, although fundamental flaws regarding the program's structure and its impact on school district spending incentives remain.
Recommendations related to School Tax Relief (STAR)
The state should provide a tax credit for new homeowners so taxpayers bear the full burden of their school taxes directly, and school districts would gradually lose the state subsidy.
The state should eliminate taxpayers in New York City making more than $500,000 from the program.
The state should freeze the exemption benefit to better target benefits to those who most need them.
The state should recoup improperly claimed tax benefits from past years.
Key Data
$3.4 billion
— The annual cost of the School Tax Relief (STAR) program, which is New York’s largest property tax relief program.
$30,000
— The amount of home value generally exempted from local property tax assessment under the STAR program.
$500,000
— The income threshold for New York City taxpayers above which they are eliminated from the STAR program.
New York's School Tax Relief (STAR) program, which costs $3.4 billion annually, is criticized for failing to target relief to those most burdened by property taxes and for disproportionately benefiting wealthier districts. The state should reform this program and expand the Real Property Tax Credit to better support low- and moderate-income households.
Recommendations related to School Tax Relief (STAR)
The Tax Relief Commission should better target STAR aid to ensure it reaches those most burdened by property taxes.
The Commission should re-examine and reform the local tax relief programs on which the State already spends $4 billion annually.
The Commission should expand the Real Property Tax Credit so that it provides deeper relief for low and moderate income households with the greatest burden.
Key Data
$3.4 billion
— Cost of the School Tax Relief (STAR) program in fiscal year 2014.
$1,533 per pupil
— Amount of STAR aid provided to the wealthiest/least-needy 10 percent of school districts.
$991 per pupil
— Average amount of STAR aid provided to the least-wealthy/neediest 10 percent of school districts.
$4 billion
— Annual amount the State spends on local tax relief programs.
$20.2 million
— Total Real Property Circuit Breaker tax credit provided to taxpayers in 2010.
209,691
— Number of taxpayers who received the Real Property Circuit Breaker tax credit in 2010.
The fiscal year 2009-10 New York State budget included the cancellation of the Middle Class School Tax Relief (STAR) rebate program, a move valued at $1.5 billion. This program was eliminated because it was deemed poorly conceived, expensive, and inadequately targeted to provide necessary property tax relief.
Key Data
$1.5 billion
— Value of the cancelled School Tax Reduction (STAR) payments.
$1,539 million
— Amount attributed to the Middle Class School Tax Relief (STAR) rebate cancellation in the revenue increases table.
The School Tax Relief (STAR) program is flawed and should be replaced by a circuit breaker model that provides more targeted property tax relief. By reallocating the funds currently planned for STAR, the state could reach 5.1 million owners and renters by refunding property taxes that exceed specific percentages of household income.
Recommendations related to School Tax Relief (STAR)
An improved circuit breaker would work more effectively than the STAR homestead exemption program, which is fraught with problems.
The state should reallocate the dollars currently planned for the STAR program to a circuit breaker model that refunds property taxes exceeding 5 percent of income for homeowners earning less than $20,000 and above 7 percent for all others.
The state should implement a circuit breaker program for renters that refunds property taxes in excess of 6 percent of income, utilizing funds currently allocated to the STAR program.
Key Data
5.1 million
— The total number of owners and renters that the dollars currently planned for the STAR program would reach under a proposed circuit breaker model.
$2.6 billion
— The estimated cost of a circuit breaker program that refunds property taxes above 5 percent of income for homeowners earning less than $20,000 and above 7 percent for all others.
$2.7 billion
— The estimated cost of a circuit breaker program for renters that refunds property taxes in excess of 6 percent of income.
In order to promote fiscal reform, the Citizens Budget Commission (CBC) convened three separate agenda-setting conferences for key stakeholders in the state budget process in 2007. Each session focused on one aspect of fiscal reform with a goal of identifying specific changes for the coming budget cycle. The expectation is…
The School Tax Relief (STAR) program, which provides property tax exemptions and rebates, has grown to cost $4.7 billion annually but is criticized for being a tax shift rather than a reduction, as it often motivates school districts to increase spending. The program's distribution formula disproportionately favors wealthier districts, and it fails to provide relief to businesses or renters in most municipalities, prompting calls to convert it into a more equitable, income-based circuit breaker system.
Recommendations related to School Tax Relief (STAR)
The State should base a household’s rebate on property taxes as a share of income to improve upon the STAR rebate program.
The State should include renters and commercial property owners in the STAR program by calculating a property tax equivalent amount.
The State should implement a provision to automatically adjust STAR criteria for inflation to ensure the program remains effective.
The State should cap the new STAR rebate to limit costs and prevent local governments from excessively increasing the local property tax.
The State should replace the STAR homestead exemption program with a much expanded circuit breaker program over time.
Key Data
$4.7 billion
— Total school property tax relief spending in fiscal year 2007-08.
$3.7 billion
— Funding for the initial STAR exemption program in the current fiscal year.
$1 billion
— Annual funding for the Middle-Class STAR Rebate Program.
$581 million
— Potential property tax relief for nonresidential property owners outside of New York City in 2005.
$670 million
— Cost of the property tax rebate program in its first year.
The School Tax Relief (STAR) program, intended to provide property tax relief, disproportionately benefits wealthy school districts and undermines the redistributive goals of state school aid formulas. By incentivizing increased local spending and failing to target aid based on need, the program exacerbates funding disparities between wealthy and poor districts across New York.
Recommendations related to School Tax Relief (STAR)
The State should adopt school aid formulas that more effectively equalize variations in local wealth by applying a uniform local tax rate across districts and providing aid only to those that cannot meet per pupil adequacy targets.
The State should impose a luxury tax on wealthy districts by adding a tax surcharge onto local effort above a spending threshold that would require the district to share the revenue with less fortunate districts through a state-administered pool.
New York should fully fund its public schools entirely from State sources (excluding any federal aid) to spread the burden for raising revenues across a wide population group and eliminate disparities among districts in tax burdens and spending levels.
The State should free up existing resources to fund schools by cutting spending on other services, such as Medicaid and the prison system, to help finance the increment required to meet the court mandate.
Key Data
$3.2 billion
— Amount committed to financing education in the form of the School Tax Relief (STAR) program in school year 2004-05.
28 percent
— Amount more in STAR aid per pupil that the wealthiest 10 percent of districts received on average compared to the lowest 10 percent.
10 percent
— Estimated portion of STAR aid that has been used to support added school spending rather than as tax relief.
16 percent
— Share of State-provided local revenues for education that STAR aid comprised in 2005-06.
$620
— Average savings per household provided by the Basic STAR program.
$930
— Average benefit provided to senior households by the Enhanced STAR program.
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