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.
If you escrow your taxes, the difference matters for your monthly payment too. The exemption lowers your annual tax bill directly — so your mortgage servicer escrows less per month. The credit doesn't change your escrow at all (you still pay the full bill, then get the credit check). Model what your monthly payment looks like either way with our PITI calculator.
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.