If you operate your business in New York, there are tons of programs and incentives that can help you earn income savings, tax deductions and other business-related benefits.
We have highlighted the main points of the various incentives below for you to consider. Please keep in mind there are additional requirements that may be required and we recommend that you reach out to your Withum tax advisor for a comprehensive explanation of requirements and details to determine your eligibility.
|NYS Excelsior Jobs Program||Fully refundable tax credits that can be claimed over a benefit period of up to 10 years.||
|Qualified Emerging Technology Company (QETC) Capital Tax Credit||10% of qualified investments in certified QETCs if investment will be held for four years from the close of the tax year in which the QETC capital tax credit is first claimed, and 20% of qualified investments in certified QETCs, if qualified investment will be held for nine years from the close of the tax year in which the QETC capital tax credit is first claimed.||
|QETC Employment Tax Credit||The amount of the credit is equal to the average number of full-time employees in New York State for the current tax year, minus the QETC’s base year employment number, multiplied by $1,000.The credit is available for three consecutive years.||
|Real Estate Tax Abatement||As part of the Commercial Revitalization Program (CRP), eligible companies can receive a $2.50 per square foot real estate tax abatement for up to 5 years.||
|Commercial Rent Tax (CRT) Special Reduction||As part of the CRP, eligible companies can receive an exemption on the commercial rent tax for 5 years.||
|Lower Manhattan Energy Program (LMEP)||Reduced energy costs for up to 12 years for eligible buildings and tenants.||
|NYS Sales Tax Exemption for Build-Out||Exemption from sales tax on goods purchased for build-out of space.||
|Relocation and Employment Assistance Program (REAP)||12 year annual tax credit of $3,000 for each qualified job relocated into targeted areas.||
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NYS Excelsior Jobs Program
The NYS Excelsior Jobs Program provides 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 industries that create and maintain new jobs or make significant financial investment are eligible to apply for up to four new tax credits: Excelsior Jobs Tax Credit; Excelsior Investment Tax Credit; Excelsior R&D Tax Credit; and Excelsior Real Property Tax Credit. The Program will encourage businesses to expand in and relocate to New York while maintaining strict accountability standards to guarantee that businesses deliver on job and investment commitments. A firm must apply to Empire State Development (ESD) with its plan for expansion or growth. Based on that plan, ESD will calculate the maximum potential tax credits over a 5-year period, based on: Projected capital investment, amount of salary & benefits expected to be paid to new employees, R&D expenditures, and for certain firms and in certain areas, property taxes paid on the facility .
Qualified Emerging Technology Company (QETC) Credit
A qualified emerging technology company is, pursuant to section 3102-e of the Public Authorities Law (PAL), a company located in New York State that has total annual product sales of $10 million or less and meets either of the following criteria:
(1) Its primary products or services are classified as emerging technologies under section 3102-e(1)(b) of the PAL; or
(2) It has research and development activities in New York State and its ratio of research and development funds to net sales equals or exceeds the average ratio for all surveyed companies classified (as determined by the National Science Foundation (NSF) in the most recently published results from its survey of industrial research and development or a comparable successor survey as determined by the Tax Department).
There are two types of QETC credits available.
QETC Capital Tax Credit
You are entitled to this nonrefundable credit if you or your business made a qualified investment in a certified QETC. A certified QETC means a qualified emerging technology company which has filed Form DTF-620, Application for Certification of a Qualified Emerging Technology Company, and has been certified as a QETC by the Commissioner of Taxation and Finance.
The credit is 10% of qualified investments in certified QETCs, if you or your business certifies to the Commissioner of Taxation and Finance at the time the credit is claimed that the qualified investment will not be sold, transferred, traded, or disposed of within four years from the close of the tax year in which the QETC capital tax credit is first claimed, and 20% of qualified investments in certified QETCs, if you or your business certifies to the Commissioner of Taxation and Finance at the time the credit is claimed that the qualified investment will not be sold, transferred, traded, or disposed of within nine years from the close of the tax year in which the QETC capital tax credit is first claimed.
QETC Employment Tax Credit
You are entitled to this refundable credit if you or your business is a qualified emerging technology company (QETC), and the average number of individuals employed full-time by the QETC in New York State during the tax year is at least 101% of the QETC’s base year employment number. The amount of the credit is equal to the average number of full-time employees in New York State for the current tax year, minus the QETC’s base year employment number, multiplied by $1,000.The credit is available for three consecutive years .
Commercial Revitalization Program (CRP)
The NYC department of finance offers two incentives under this program; the real estate tax abatement and the CRT special reduction .
Real estate tax abatement– this program offers a $2.50 per square foot real estate tax abatement for up to 5 years for commercial tenants that locate in non-residential pre-1975 buildings south of Murray Street and Frankfort Street, west of South Street and east of West Street in Lower Manhattan. Tenants must submit their application within 180 days of lease commencement .
CRT special reduction– this program offers an exemption on the commercial rent tax, a tax paid by retailers and commercial businesses with an annual rent of over $200,000 per year. The tenant must be located in a non-residential building south of Canal Street and the credit benefit includes a base rent reduction for the first five years equal to the lesser of the first year’s rent or 100% of the rent paid for the period .
Lower Manhattan Energy Program (LMEP)
LMEP can reduce energy costs by up to 45% for 12 years for eligible buildings and commercial tenants in those buildings south of Murray Street. Tenants do not need to submit an application for LMEP. Tenants located in an eligible building should receive an energy credit from their landlord. When negotiating a lease, tenants should confirm the status of the building either with the building manager or Small Business Services .
NYS Sales Tax Exemption for Build-Out
This program provides an exemption from the sales tax on goods purchased for the build-out of office space in Lower Manhattan south of Murray Street. Lease terms must be at least 10 years and only direct leases are eligible (no subleases). Businesses that locate in the World Trade Center, 7 World Trade, Brookfield Place, or Battery Park City, can receive an exemption on sales tax for all goods purchased, including personal property such as furniture and equipment. Businesses located in all other areas south of Murray Street can receive an exemption only on those goods purchased for a buildout that will result in permanent capital improvements to the space. Retailers do not qualify for this program .
Relocation and Employment Assistance Program (REAP)
REAP Offers business income tax credits for relocating jobs from outside of New York City or below 96th Street in Manhattan to designated locations above 96th Street in Manhattan or in one of the other four boroughs. To apply, the Company must have conducted substantial business for at least 24 consecutive months immediately before relocating and has to move at least one employee from outside the REAP area to a qualified location. The benefit is a 12 year annual tax credit of $3,000 for each qualified job relocated into targeted areas ($1,000 in non-targeted areas). Improvements to buildings are required or the lease term be at least 3 years. REAP benefits are also available to businesses relocating into Lower Manhattan. Restrictions exist for businesses moving from south of Houston Street.
Author: Samantha Greenbaum, CPA | [email protected] and Dana Minardi, CPA | [email protected]