Compute New York's 2026 child and dependent care credit under Tax Law 606(c-2)

changelog.d/ny-cdcc-2026-new-credit.fixed.md

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+Compute New York's 2026 child and dependent care credit under Tax Law 606(c-2), added by L.2026, ch. 59, Part A: qualifying expenses times a 55%-to-4% applicable percentage, less $20 per $1,000 of New York AGI above $750,000. The 606(c) percentage-of-federal credit now applies only before 2026.

policyengine_us/parameters/gov/states/ny/tax/income/credits/cdcc/decoupled/expense_cap.yaml

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+description: New York caps qualifying expenses for the child and dependent care credit at this amount, based on the number of qualifying individuals.
+brackets:
+  - threshold:
+      2026-01-01: 1
+    amount:
+      2026-01-01: 3_000
+  - threshold:
+      2026-01-01: 2
+    amount:
+      2026-01-01: 6_000
+  - threshold:
+      2026-01-01: 3
+    amount:
+      2026-01-01: 7_500
+  - threshold:
+      2026-01-01: 4
+    amount:
+      2026-01-01: 8_500
+  - threshold:
+      2026-01-01: 5
+    amount:
+      2026-01-01: 9_000
+metadata:
+  type: single_amount
+  threshold_unit: person
+  amount_unit: currency-USD
+  period: year
+  label: New York expense-based child and dependent care credit expense cap
+  reference:
+    - title: N.Y. Tax Law 606(c-2)(2)(D)(iii)
+      href: https://www.nysenate.gov/legislation/laws/TAX/606
+    - title: L.2026, ch. 59 (S.9009-C), Part A, sec. 2
+      href: https://www.nysenate.gov/legislation/bills/2025/S9009/amendment/C

policyengine_us/parameters/gov/states/ny/tax/income/credits/cdcc/decoupled/in_effect.yaml

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+description: New York computes the child and dependent care credit from qualifying care expenses under Tax Law 606(c-2), rather than as a percentage of the federal credit under 606(c), if this is true.
+values:
+  2000-01-01: false
+  # 606(c)(1) applies to "taxable years beginning before January first, two
+  # thousand twenty-six"; 606(c-2)(1) to taxable years beginning on or after.
+  2026-01-01: true
+metadata:
+  unit: bool
+  period: year
+  label: New York expense-based child and dependent care credit in effect
+  reference:
+    - title: N.Y. Tax Law 606(c-2)
+      href: https://www.nysenate.gov/legislation/laws/TAX/606
+    - title: L.2026, ch. 59 (S.9009-C), Part A, secs. 1 and 2
+      href: https://www.nysenate.gov/legislation/bills/2025/S9009/amendment/C
+    - title: N.Y. Tax Law 606(c)(1)
+      href: https://www.nysenate.gov/legislation/laws/TAX/606

policyengine_us/parameters/gov/states/ny/tax/income/credits/cdcc/decoupled/rate/max.yaml

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+description: New York sets the child and dependent care credit applicable percentage at this rate for filers with New York adjusted gross income at or below the phase-down threshold.
+values:
+  2026-01-01: 0.55
+metadata:
+  unit: /1
+  period: year
+  label: New York expense-based child and dependent care credit maximum rate
+  reference:
+    - title: N.Y. Tax Law 606(c-2)(2)(E)(i)
+      href: https://www.nysenate.gov/legislation/laws/TAX/606
+    - title: L.2026, ch. 59 (S.9009-C), Part A, sec. 2
+      href: https://www.nysenate.gov/legislation/bills/2025/S9009/amendment/C

policyengine_us/parameters/gov/states/ny/tax/income/credits/cdcc/decoupled/rate/min.yaml

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+description: New York does not reduce the child and dependent care credit applicable percentage below this rate.
+values:
+  2026-01-01: 0.04
+metadata:
+  unit: /1
+  period: year
+  label: New York expense-based child and dependent care credit minimum rate
+  reference:
+    - title: N.Y. Tax Law 606(c-2)(2)(E)
+      href: https://www.nysenate.gov/legislation/laws/TAX/606
+    - title: L.2026, ch. 59 (S.9009-C), Part A, sec. 2
+      href: https://www.nysenate.gov/legislation/bills/2025/S9009/amendment/C

policyengine_us/parameters/gov/states/ny/tax/income/credits/cdcc/decoupled/rate/phase_down_rate.yaml

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+description: New York reduces the child and dependent care credit applicable percentage by this rate for each dollar of New York adjusted gross income above the phase-down threshold.
+values:
+  # "twenty-five hundred thousandths of a percentage point for each dollar":
+  # 0.00025 percentage points, or 0.0000025 as a decimal rate.
+  2026-01-01: 0.0000025
+metadata:
+  unit: /1
+  period: year
+  label: New York expense-based child and dependent care credit rate phase-down rate
+  reference:
+    - title: N.Y. Tax Law 606(c-2)(2)(E)(ii)
+      href: https://www.nysenate.gov/legislation/laws/TAX/606
+    - title: L.2026, ch. 59 (S.9009-C), Part A, sec. 2
+      href: https://www.nysenate.gov/legislation/bills/2025/S9009/amendment/C

policyengine_us/parameters/gov/states/ny/tax/income/credits/cdcc/decoupled/rate/phase_down_threshold.yaml

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+description: New York reduces the child and dependent care credit applicable percentage for each dollar of New York adjusted gross income above this threshold.
+values:
+  2026-01-01: 15_000
+metadata:
+  unit: currency-USD
+  period: year
+  label: New York expense-based child and dependent care credit rate phase-down threshold
+  reference:
+    - title: N.Y. Tax Law 606(c-2)(2)(E)
+      href: https://www.nysenate.gov/legislation/laws/TAX/606
+    - title: L.2026, ch. 59 (S.9009-C), Part A, sec. 2
+      href: https://www.nysenate.gov/legislation/bills/2025/S9009/amendment/C

policyengine_us/parameters/gov/states/ny/tax/income/credits/cdcc/decoupled/reduction/amount.yaml

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+description: New York reduces the child and dependent care credit by this amount for each increment of New York adjusted gross income above the reduction threshold.
+values:
+  2026-01-01: 20
+metadata:
+  unit: currency-USD
+  period: year
+  label: New York expense-based child and dependent care credit reduction amount
+  reference:
+    - title: N.Y. Tax Law 606(c-2)(3)
+      href: https://www.nysenate.gov/legislation/laws/TAX/606
+    - title: L.2026, ch. 59 (S.9009-C), Part A, sec. 2
+      href: https://www.nysenate.gov/legislation/bills/2025/S9009/amendment/C

policyengine_us/parameters/gov/states/ny/tax/income/credits/cdcc/decoupled/reduction/increment.yaml

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+description: New York reduces the child and dependent care credit for each increment of this size of New York adjusted gross income above the reduction threshold.
+values:
+  2026-01-01: 1_000
+metadata:
+  unit: currency-USD
+  period: year
+  label: New York expense-based child and dependent care credit reduction increment
+  reference:
+    - title: N.Y. Tax Law 606(c-2)(3)
+      href: https://www.nysenate.gov/legislation/laws/TAX/606
+    - title: L.2026, ch. 59 (S.9009-C), Part A, sec. 2
+      href: https://www.nysenate.gov/legislation/bills/2025/S9009/amendment/C

policyengine_us/parameters/gov/states/ny/tax/income/credits/cdcc/decoupled/reduction/threshold.yaml

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+description: New York reduces the child and dependent care credit for New York adjusted gross income above this threshold.
+values:
+  2026-01-01: 750_000
+metadata:
+  unit: currency-USD
+  period: year
+  label: New York expense-based child and dependent care credit reduction threshold
+  reference:
+    - title: N.Y. Tax Law 606(c-2)(3)
+      href: https://www.nysenate.gov/legislation/laws/TAX/606
+    - title: L.2026, ch. 59 (S.9009-C), Part A, sec. 2
+      href: https://www.nysenate.gov/legislation/bills/2025/S9009/amendment/C

policyengine_us/tests/policy/baseline/gov/states/ny/tax/income/credits/ny_cdcc_2026.yaml

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+# From tax year 2026 the New York child and dependent care credit is the
+# refundable N.Y. Tax Law 606(c-2) credit, added by L.2026, ch. 59 (S.9009-C),
+# Part A, signed 2026-05-28: qualifying expenses times the applicable
+# percentage, less $20 for each $1,000 of New York AGI above $750,000. The
+# pre-2026 606(c)(1) credit (a percentage of the federal credit) applies only to
+# "taxable years beginning before January first, two thousand twenty-six".
+
+- name: Case 1, PolicyBench scenario_082, head of household with a one-year-old.
+  period: 2026
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 23
+        employment_income: 100_195
+      person2:
+        age: 1
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        tax_unit_childcare_expenses: 9_600
+        ny_agi: 117_585.15
+        adjusted_gross_income: 117_652.65
+    households:
+      household:
+        members: [person1, person2]
+        state_code: NY
+  output:
+    ny_cdcc_qualifying_expenses: 3_000
+    # 3,000 x (0.55 - 0.0000025 x 102,585.15) = 3,000 x 0.293537125
+    ny_cdcc: 880.61
+    # Empire State child credit: $1,000 for a child under four, less $16.50
+    # for each of 42 whole $1,000 steps of federal AGI above $75,000.
+    ny_ctc: 307
+    # PolicyBench reference audit 2026-10-05: $307 + $880.61, not $667.
+    ny_refundable_credits: 1_187.61
+
+- name: Case 2, the same household in 2025 keeps the 606(c) credit.
+  period: 2025
+  absolute_error_margin: 0.01
+  input:
+    people:
+      person1:
+        age: 23
+        employment_income: 100_195
+      person2:
+        age: 1
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        tax_unit_childcare_expenses: 9_600
+        ny_agi: 117_585.15
+        adjusted_gross_income: 117_652.65
+    households:
+      household:
+        members: [person1, person2]
+        state_code: NY
+  output:
+    # 3,000 x (606(c) percentage 0.2 x 3.0 (1-a) factor) x 20% federal rate
+    ny_cdcc: 360
+
+- name: Case 3, New York AGI at or below $15,000 earns 55% of qualifying expenses.
+  period: 2026
+  input:
+    state_code: NY
+    ny_agi: 12_000
+    ny_cdcc_qualifying_expenses: 6_000
+  output:
+    ny_cdcc: 3_300
+
+- name: Case 4, the credit is 4% of qualifying expenses at high incomes.
+  period: 2026
+  input:
+    state_code: NY
+    ny_agi: 300_000
+    ny_cdcc_qualifying_expenses: 3_000
+  output:
+    ny_cdcc: 120
+
+- name: Case 5, New York AGI less than $1,000 above $750,000 brings no reduction.
+  period: 2026
+  input:
+    state_code: NY
+    ny_agi: 750_999
+    ny_cdcc_qualifying_expenses: 9_000
+  output:
+    # 9,000 x 0.04; no whole $1,000 above $750,000
+    ny_cdcc: 360
+
+- name: Case 6, $20 reduction for each $1,000 of New York AGI above $750,000.
+  period: 2026
+  input:
+    state_code: NY
+    ny_agi: 760_000
+    ny_cdcc_qualifying_expenses: 9_000
+  output:
+    # 9,000 x 0.04 - 20 x 10
+    ny_cdcc: 160
+
+- name: Case 7, the reduction does not take the credit below zero.
+  period: 2026
+  input:
+    state_code: NY
+    ny_agi: 800_000
+    ny_cdcc_qualifying_expenses: 3_000
+  output:
+    # max(0, 3,000 x 0.04 - 20 x 50)
+    ny_cdcc: 0
+
+- name: Case 8, a married taxpayer filing separately who lives with the spouse gets no credit.
+  period: 2026
+  input:
+    state_code: NY
+    filing_status: SEPARATE
+    ny_agi: 40_000
+    ny_cdcc_qualifying_expenses: 3_000
+  output:
+    ny_cdcc: 0
+
+- name: Case 9, a taxpayer claimed as another taxpayer's dependent gets no credit.
+  period: 2026
+  input:
+    state_code: NY
+    head_is_dependent_elsewhere: true
+    ny_agi: 20_000
+    ny_cdcc_qualifying_expenses: 3_000
+  output:
+    ny_cdcc: 0

policyengine_us/tests/policy/baseline/gov/states/ny/tax/income/credits/ny_cdcc_applicable_percentage.yaml

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+# N.Y. Tax Law 606(c-2)(2)(E), added by L.2026, ch. 59, Part A: 55% at New York
+# AGI of $15,000 or less, reduced by 0.00025 percentage points for each dollar
+# above $15,000, and never below 4%.
+- name: Case 1, New York AGI below $15,000 gets 55%.
+  period: 2026
+  input:
+    state_code: NY
+    ny_agi: 12_000
+  output:
+    ny_cdcc_applicable_percentage: 0.55
+
+- name: Case 2, New York AGI of exactly $15,000 gets 55%.
+  period: 2026
+  input:
+    state_code: NY
+    ny_agi: 15_000
+  output:
+    ny_cdcc_applicable_percentage: 0.55
+
+- name: Case 3, New York AGI of $100,000.
+  period: 2026
+  absolute_error_margin: 0.000001
+  input:
+    state_code: NY
+    ny_agi: 100_000
+  output:
+    # 0.55 - 0.0000025 * 85,000 = 0.3375 (OSC SFY 2027 Executive Budget
+    # report, Figure 11: 33.8% at $100,000)
+    ny_cdcc_applicable_percentage: 0.3375
+
+- name: Case 4, PolicyBench scenario_082 New York AGI.
+  period: 2026
+  absolute_error_margin: 0.000001
+  input:
+    state_code: NY
+    ny_agi: 117_585.15
+  output:
+    # 0.55 - 0.0000025 * 102,585.15 = 0.293537125
+    ny_cdcc_applicable_percentage: 0.293537125
+
+- name: Case 5, the 4% floor is reached exactly at $219,000.
+  period: 2026
+  absolute_error_margin: 0.000001
+  input:
+    state_code: NY
+    ny_agi: 219_000
+  output:
+    # 0.55 - 0.0000025 * 204,000 = 0.04
+    ny_cdcc_applicable_percentage: 0.04
+
+- name: Case 6, New York AGI above $219,000 stays at the 4% floor.
+  period: 2026
+  input:
+    state_code: NY
+    ny_agi: 300_000
+  output:
+    ny_cdcc_applicable_percentage: 0.04
+
+- name: Case 7, negative New York AGI gets 55%.
+  period: 2026
+  input:
+    state_code: NY
+    ny_agi: -10_000
+  output:
+    ny_cdcc_applicable_percentage: 0.55