New York Basic Business Taxes 2011
New York's economic development, finance, and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include corporate income tax, investment tax credits, and the Excelsior Jobs Program.
The Excelsior Jobs Program, administered by Empire State Development (ESD), will provide job creation and investment incentives to firms in such targeted industries as biotechnology, pharmaceutical, high-tech, clean-technology, green technology, financial services, agriculture and manufacturing. Firms in these strategic industries that create and maintain new jobs or make significant financial investment may be eligible to apply for up to four new refundable tax credits. Businesses claim the credits over a five year period.
• The Excelsior Jobs Tax Credit: A credit of up to $5,000 per new job to cover a portion of the associated payroll cost.
• The Excelsior Investment Tax Credit: Valued at two percent of qualified investments.
• The Excelsior Research and Development Tax Credit: A ten percent credit for new investments based on the Federal Research and Development credit.
• The Excelsior Real Property Tax Credit: Available to firms locating in certain distressed areas and to firms in targeted industries that meet higher employment and investment thresholds (Regionally Significant Project).
Brownfield redevelopment credit:
Three refundable credits are available to taxpayers that have executed a "Brownfield Cleanup Agreement" with the Department of Environmental Conservation and have received a remediation certificate pursuant to such agreement.
• Brownfield Redevelopment Credit - consists of the sum of the site preparation costs, tangible property costs, and on-site groundwater remediation costs.
For qualified sites admitted to the Brownfield Cleanup Program on/after June 23, 2008:
• the tangible property credit component is capped at:
o $35 million, or three times the costs included in the calculation of the site preparation credit component and the on-site groundwater remediation credit component, whichever is less; or
o $45 million, or six times the costs included in the calculation of the site preparation credit component and the on-site groundwater remediation credit component, whichever is less, in the case of a qualified site to be used primarily for manufacturing activities.
• the applicable percentages, up to a maximum of 50 percent, for purposes of calculating the site preparation credit component and the on-site groundwater remediation credit component are based on the level of cleanup achieved, as follows:
o soil cleanup for unrestricted use, the protection of groundwater or the protection of ecological resources, the applicable percentage shall be 50 percent;
o soil cleanup for residential use, the applicable percentage shall be 40 percent, except for Track 4 which shall be 25 percent;
o soil cleanup for commercial use, the applicable percentage shall be 33 percent, except for Track 4 which shall be 25 percent;
o soil cleanup for industrial use, the applicable percentage shall be 27 percent, except for Track 4 which shall be 22 percent.
• Remediated Brownfield Credit for Property Taxes - The amount of the credit against the taxpayer's income tax increases based upon the number of persons employed at the qualified site and is generally equal to 25 percent of the product of the "employment number factor" and the eligible property taxes paid. If the property is located in an Environmental Zone, the credit is not subject to the 25 percent limitation.
• Environmental Remediation Insurance Credit - For premiums paid for environmental remediation insurance, up to the lesser of $30,000 or 50 percent of the cost of premiums.
A credit is available for employers who employ individuals with disabilities. The credit equals 35 percent of the first $6,000 of first-year wages paid to the disabled employee (maximum of $2,100 per employee). However, if the first-year wages qualify for the federal work opportunity tax credit, the New York credit will apply to the second-year wages.
Research/Emerging Technologies Credits:
Research and development credit: A credit of 9 percent against the corporation franchise tax (or 7 percent against the personal income tax) is available for investment in property used for research and development in the experimental or laboratory sense. Qualified Emerging Technology Employment Credit: A refundable credit of $1,000 per new full-time employee (employees in excess of 100 percent of base year employment level) is available for one three-year period (the year the credit is first claimed and in each of the next two years provided minimum employment levels are maintained).
Qualified Emerging Technology Company Capital Tax Credit:
An investors may be allowed a credit equal to a percentage of each qualified investment in a qualified emerging technology company certified by the Commissioner of Taxation and Finance as follows:
• Ten percent of qualified investments, provided the taxpayer certifies that it will not be sold, transferred, traded, or disposed of during the four years following the year in which the credit is first claimed; or
• Twenty percent of qualified investments, provided the taxpayer certifies that it will not be sold, transferred, traded or disposed of during the nine years following the year in which the credit is first claimed.
Investments made by or on behalf of an owner of the business, including but not limited to a stockholder, partner or sole proprietor, or any related person, are not eligible for this credit. The total amount of the credit allowable to a taxpayer for all years, taken in the aggregate, cannot exceed $150,000 (at the 10 percent rate) and $300,000 (at the 20 percent rate). The use of the credit is limited to 50 percent of the tax otherwise due; unused credits can be carried forward indefinitely (no refund provision). The program provides for the recapture of a pro rata share of the credit in the event the qualified investment is not held for the requisite period.
Qualified Emerging Technology Company Facilities, Operations and Training Credit:
A refundable credit for qualified emerging technology companies, equal to the sum of:
• Eighteen percent of the cost or other basis for federal income tax purposes of "research and development property" acquired by the taxpayer by purchase and placed in service during the taxable year;
• Nine percent for "qualified research expenses" paid or incurred by the taxpayer in the taxable year; and
• One hundred percent of "qualified high technology training expenditures" paid or incurred by the taxpayer, up to $4,000 per employee per taxable year.
To be eligible, the QETC must:
• Have no more than 100 full-time employees, of which at least 75 percent are employed in New York State;
• Have a ratio of research and development funds to net sales (as referred to in Public Authorities Law section 3102-e) which equals or exceeds six percent during its authorized taxable year; and
• Have gross revenues, along with the gross revenues of its affiliates and related members, not exceeding $20 million for the taxable year immediately preceding the year the taxpayer claims this credit.