The New York Life Sciences Research and Development Tax Credit was introduced in 2018 for tax years beginning after January 1, 2018. This credit is designed to encourage life sciences entities to locate their businesses in New York by way of receiving a refundable tax credit.
Who Qualifies for the Credit?
To qualify for the credit, the business must meet the definition of a “new business” under New York Tax Law section 210-b(1)(f) or section 606(a)(10) and must be engaged in research and development in life sciences activities in New York.
What Expenses Qualify?
Qualified research expenses are those defined under Section 41(b) of the Internal Revenue Code but do not include contract research expenses. Expenses that qualify include:
- Wages paid or incurred to employees for qualified services performed
- Supplies used in the conduct of research
- Amounts paid or incurred to another person for the right to use computers in the conduct of qualified research.
- How much is the credit?
It is a fully refundable credit of 20% of qualified expenses for applicants having fewer than 10 employees and 15% of the qualified expenses for applicants having 10 or more employees. A refundable tax credit can reduce the business’s tax liability to the statutory minimum, and all the business can get a refund of the excess credit. This provides valuable cashback to the businesses to reinvest in research and development.
For How Many Years is the Credit Available?
The New York Life Sciences Tax Credit program makes available $10 million per year that can be allocated among new businesses. A qualified business is allowed the credit for up to three consecutive years, beginning with the first taxable year on or after January 1, 2018. The credit is allocated on a first come first served basis based on the application date. The credit cannot exceed $500,000 per year and $1.5 million in a lifetime.
When to Apply?
Applications are accepted throughout the year so long as the available $10 million funding for that year is available. The credit is available for tax years between January 1, 2018 and January 1, 2028.