New York R&D Tax Credit Summary

NEW YORK R&D TAX CREDIT SUMMARY

New York State R&D Tax Credits

New York has a State R&D Tax credit based on qualified research expenses that mirror the Federal Research Tax credit, they offer several other credits associated with R&D activity, job creation, and investment as well.

New York State Investment Tax Credit (ITC)

In addition to the standard ITC, New York offers an optional ITC on R&D investments with the following parameters:

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An ITC equal to 9% of qualified investment in R&D buildings and tangible personal property
Taken in place of the regular ITC
Credit can reduce the tax to the higher of the alternative minimum tax or fixed dollar minimum tax
New businesses take a refund of unused credit*
Unused credits can be carried forward for 15 years (10 years for personal income taxpayers)

How to Obtain the Credit?

No application or pre-certification required. Taxpayers calculate the credit using Form-CT-46.

Refundable/Transferable Tax Credit – Yes*

New York Excelsior Jobs Program R&D Tax Credit

As part of the Excelsior Jobs Program, qualified companies are entitled to refundable R&D Tax Credit of 50 percent of the Federal Research Tax Credit up to three percent of research expenses in New York State.

How to Obtain the Credit?

This is a discretionary program that must be applied for. The minimum job requirement for an application is five, but regionally significant projects will have a commitment to 20 jobs and $6 million of investment. Applicants must complete a consolidated funding application to the local ESD office.

Refundable/Transferable Tax Credit- Yes

New York Qualified Emerging Technology Companies (QETC)

A QETC is a company located in New York State with total annual product sales of $10 million or less, and meets either of the following:

Primary products or services that include:
• Advanced materials and processing technologies
• Engineering, production, and defense
• Electronic and photonic devices and components
• Information and communications technologies
• Bio- and Nano-technologies
• Re-manufacturing technologies
Or
• The company has research and development (R&D) activities in New York State, and its ratio of R&D funds to net sales equals or exceeds the average ratio for all surveyed companies, as determined by the National Science Foundation

A qualified QETC is entitled to a credit on their qualified investments as follows:
• 10% of qualified investments in certified QETCs with a useful life of four years
• 20% of qualified investments in certified QETCs with a useful life of nine years

Qualified investments do not include investments made by current owners of the QETC. Owner is defined as an entity that owns more than 10% interest in a QETC.

A qualified QETC is also entitled to an Employment Tax Credit of up to $1,000 per full-time employee. The credit is available for three consecutive tax years and has other limitations.

How to Obtain the Credit?

Certification by the New York State Department of Taxation and Finance is required before you can claim the credits. Companies must file form DTF-620 30 days prior to the beginning date of certification. The company will be notified about its certification within 30 days by New York.

Refundable/Transferable Tax Credit- No

Life Sciences Research & Development Tax Credit

Life Science companies in New York are entitled to a refundable research and development tax credit if they are a new business, have paid or incurred qualified research and development expenses in New York State, and received a certificate of tax credit issued by Empire State Development (ESD).

The credit is equal to 15% of the company’s R&D expenditures in New York for a company that employs 10 or more persons and 20% for a company that employs fewer than 10 persons.

The credit is available for tax years beginning on or after January 1, 2018, but before January 1, 2028, and allowed for up to three consecutive years. The credit is also limited to $500,000 per year with a lifetime cap of $1.5 million per company.

The entire program has a $10 million per year credit which can be allocated to qualifying business

Refundable/Transferable Tax Credit- Yes

New York City Biotechnology Tax Credit (Expires 12/31/2015)

This NYC Biotechnology Tax Credit allows investors and owners of QETCs focused on biotechnology to claim a refundable tax credit against the General Corporation Tax and Unincorporated Business Tax for amounts paid or incurred for certain facilities, operations and employee training in New York City. To claim the Biotechnology Tax Credit, the QETC must be:

•located in NYC
•have total annual product sales of $10 million or less
•have either its primary products or services classified as emerging technologies, or it has R&D activities in NYC

How to Obtain the Credit?

Companies are required to submit an application by January 15th immediately following the year of the credit, and the Department of Finance will make a determination of the amount of biotechnology credit the taxpayer may claim and mail a certificate of eligibility to the taxpayer indicating that amount on or before February 15th.

Refundable/Transferable Tax Credit- Yes

Flow-Through Entity

Policy options targeting small businesses include allowing a refund of unused ITC and subsequent years’ employment credit and extending the EIC to small businesses, such as S corporations, limited liability companies (LLCs), limited liability partnerships (LLPs), and partnerships, whose owners become taxable under the personal income tax. Extending the ITC refundability would provide small businesses with an immediate infusion of cash. It would ease cash flow problems that often cause many small businesses to fail. Extending the EIC to the personal income tax would ensure that owners of flow-through entities receive the same tax benefits as small businesses taxable under the general corporate franchise tax. These entities include S corporations, LLCs, LLPs, and partnerships.

New York R&D Tax Credit Summary