How the NY Credit Connects to the Federal Credit

This isn’t a standalone calculation. To claim the New York child and dependent care credit, you first need to have claimed (or been eligible to claim) the federal child and dependent care credit on your federal return. The federal credit is governed by IRC Section 21, and the NY version builds directly on top of it. New York then takes a percentage of that federal credit and gives it to you as a state credit.

The percentage depends on your New York adjusted gross income. For the 2025 tax year, the brackets work roughly like this:

• Income under $25,000 — 110% of the federal credit
• $25,000 to $40,000 — 100% of the federal credit
• $40,000 to $50,000 — ranges from 100% down to 80%
• $50,000 to $65,000 — ranges from 80% down to 40%
• $65,000 to $150,000 — 20% of the federal credit
• Over $150,000 — no credit (phased out completely)

Read that first line again. A filer earning under $25,000 gets 110% of the federal credit. That means the state credit alone is worth more than the federal version. Combined with the federal credit, a low-income family could get more than double what they’d receive from the feds alone. For details on the federal credit, see IRS Publication 503. For more on the federal side, see our child care tax credit guide.

Who Qualifies?

The eligibility rules mirror the federal credit pretty closely. You need to have paid someone to care for a qualifying individual — typically a child under 13, a disabled spouse, or a dependent who can’t care for themselves — so you (and your spouse, if filing jointly) could work or look for work.

Both spouses have to have earned income. If one spouse stays home and doesn’t work, you generally don’t qualify, with exceptions for full-time students and disabled spouses. The care provider can’t be your spouse or the child’s parent, and if they’re under 19, they can’t be your dependent either.

New York adds one restriction the feds don’t: there’s an income ceiling. Once your NYAGI exceeds $150,000, the credit disappears entirely. The federal credit has no such hard cutoff — it just gets small. So a family earning $200,000 might still get a federal credit of a few hundred dollars but gets zero from New York. The NY credit is authorized under NY Tax Law Section 606(c).

Form IT-216: Where the Math Happens

You’ll compute the credit on Form IT-216, not directly on the IT-201. The form walks you through the calculation: start with your federal credit amount, look up your NYAGI on the percentage table, multiply, and transfer the result to Line 52.

A quick example. Say you’re a single parent with one child in daycare. You paid $6,000 in child care costs, and your federal credit came out to $600 (based on $3,000 of qualifying expenses at the 20% federal rate). Your NYAGI is $35,000. That puts you at the 100% tier, so your New York credit is also $600. You’d enter $600 on Line 52.

Now change that scenario: same parent, same costs, but NYAGI is $22,000. The percentage jumps to 110%, making the NY credit $660 — more than the federal credit itself. That extra $60 doesn’t sound like a fortune, but for a family at that income level, every dollar counts.

Refundable vs. Non-Refundable: It Depends

The NY child and dependent care credit is refundable for filers with NYAGI under $40,000. That means if the credit exceeds your tax liability, you get the difference back as a refund. Above $40,000, it’s non-refundable — it can reduce your tax to zero but won’t put cash back in your pocket beyond that.

This matters more than people realize. A non-refundable credit is only as good as the tax you owe. If you’re already at zero tax thanks to the household credit and other credits, a non-refundable care credit does nothing. But below that $40,000 threshold, the refundable version actually generates money back, regardless of your tax situation.

Dependent Care FSA and the Credit: Pick Your Strategy

If your employer offers a dependent care flexible spending account (FSA), you can set aside up to $5,000 pre-tax for child care. But here’s the catch: expenses paid through the FSA don’t count toward the credit. You can’t double-dip. The IRS addresses this interaction in Publication 503 and on Form 2441.

For higher-income filers who get only the 20% NY percentage, the FSA is almost always the better deal — $5,000 in pre-tax savings at a combined marginal rate of 30%+ beats a 20% credit. But for lower-income filers who get the 100% or 110% state percentage, skipping the FSA and taking the credit can actually come out ahead. The math depends on your exact income, filing status, and marginal rates. It’s worth running both scenarios.

Common Mistakes With Line 52

Filers earning over $150,000 sometimes fill out Form IT-216 anyway, not realizing the credit fully phases out at that level. The form will produce a zero, but it wastes time.

Another mistake: forgetting to file Form IT-216 at all. Some filers assume the credit is automatic because they claimed the federal version. It’s not. You need the separate state form.

Married couples filing separately almost never qualify, since the federal credit is unavailable to MFS filers in most situations. And parents who paid a relative for care need to be careful — payments to a dependent or to a child under 19 don’t count.

One more: mixing up this credit with the Empire State child credit on Lines 49-51. They’re different credits with different forms. The child care credit goes on Line 52; the Empire State child credit goes on Line 49. Both involve children, but the eligibility rules and calculations are completely separate.

How Line 52 Fits Into Your Total Credits

The child and dependent care credit on Line 52 is applied after the credits on Lines 49-51. Together with the earned income credit on Line 54, these credits can significantly reduce or eliminate your New York tax liability. For low-income working families, the combination of refundable EIC and refundable child care credit can produce a sizable state refund even when no state tax was owed. For a full walkthrough of every line on the return, visit our IT-201 line-by-line guide.

Sources & References

• NY Tax Department — Form IT-216: Claim for Child and Dependent Care Credit
• NY Tax Department — IT-201 Instructions
• NY Tax Law Section 606(c) — Child and Dependent Care Credit
• IRS Publication 503 — Child and Dependent Care Expenses
• 26 USC 21 — Expenses for Household and Dependent Care Services