This is the #1 STAR question on r/longisland: "Any reason not to switch to STAR credit from STAR exemption?" Here's the math, the trade-offs, and a clear recommendation.
For decades, STAR was delivered as an exemption — a direct reduction on your school tax bill. In 2016, NY State created a parallel STAR credit program, where homeowners receive a check (or direct deposit) from NY State each fall instead of a reduced bill.
In 2019, NY froze the STAR exemption at its 2019 value, while allowing the credit to grow by up to 2% per year (the property tax cap rate). New homeowners since 2015 can only get the credit. Long-time owners can stay with the exemption or switch — but once you switch, you cannot switch back.
| STAR exemption (frozen) | STAR credit (grows ~2%/yr) | |
|---|---|---|
| Income limit | $250,000 | $500,000 |
| How you get it | Reduced school tax bill | Check or direct deposit from NY State each fall |
| Annual growth | 0% (frozen at 2019 value) | Up to 2% per year (matches NY tax cap) |
| Cash flow | You pay less to start with | You pay full bill, get money back later |
| Property tax escrow impact | Lower escrow payment | Full-amount escrow payment |
| Can switch? | Yes — switch to credit anytime (one-way) | No — once on credit, stuck on credit |
If your 2019 STAR exemption was worth $1,500/yr and stays frozen, vs. a credit that starts at $1,500 in 2019 and grows 2%/yr:
Over 20 years, the credit pays ~$4,500 more than the frozen exemption. Most homeowners will see a meaningful difference within 5-7 years of switching.
The switch typically takes effect for the next tax year. Once you switch, you cannot switch back to the exemption.
Yes — the line-item bill from your school district will be higher because the STAR exemption no longer reduces it. But you receive a check from NY State that fall that fully offsets that increase (and grows over time).
"Up to 2%" — the credit grows by the lesser of 2% or the rate of inflation. In high-inflation years (2022-2023) it grew at 2%. In low-inflation years it could grow less. The exemption never grows.
Yes. If you have the exemption, escrow payment is calculated on the lower (post-STAR) bill. If you have the credit, escrow is calculated on the full bill — meaning a higher monthly mortgage payment. The annual STAR check arrives as a separate item to you, not your mortgage holder.
No. The switch is one-way. NY State made this explicit in the 2019 statute.
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Estimates and educational content only — not legal, tax, or financial advice. Verify with your county or town receiver, an attorney, or a CPA before making financial decisions.