Announced on Jan. 6, Governor Kathy Hochul's plan introduces a refundable child tax credit for the tax year 2025, providing up to $1,000 per child below 4 years and up to $500 for each child aged 4 to 16. The latter category won't be effective until 2026. The distinctive advantage of this credit is its fully refundable nature, enabling families to utilize the complete credit even if they hold no state income tax liabilities, a feature also seen in the 2021 federal child tax credit. Elaine Maag, a senior fellow at the Tax Policy Center, highlighted how this had a significant effect in reducing child poverty.
The governor's office estimates average credit receipts to rise from $472 to $943 under this proposed plan, and additionally, the present $110,000 income threshold for households would have a gradual phase-out up to incomes of $170,000.
New York families with eligible dependents could potentially claim both the Empire State Child Credit and the federal child tax credit, promising substantial extra funds over the years. This immediate surplus could be used to strengthen family finances or allocated towards high-yielding CDs or savings accounts, using the 2024 tax refund.
Options for improving personal finances range from settling debts, saving and investing. Strategies such as the snowball method for debt repayment can convey peace of mind whilst steadily building up savings. High-yield savings accounts surpass regular savings accounts with up to 4.75% APYs, forming the basis for a substantial emergency fund.
Certificates of deposit (CDs) are an intriguing alternative with greater APYs, although access to funds is limited for their term. The market investments approach requires careful selection of trading platforms and securities, accepting the inherent element of risk. However, the S&P 500 index records average returns of approximately 10% annually since 1957, offering a potential increment of $100 on an initial $1,000 investment after a year.