New York budget impacts state incentive programs


Matthew DiDonato
New York City
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Mike Eickhoff
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Gina Kucera
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Matthew Kalina
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Gov. Andrew Cuomo signed New York State budget legislation on April 3, expanding and extending several state credit and incentive programs.1 Specifically, the legislation made changes to the Excelsior Jobs Credit Program, “hire a veteran” credit, Empire State film production and post-production credit, and industrial and commercial abatement program.

Excelsior Jobs Credit Program Eligible participants in the Excelsior Jobs Credit Program may claim a credit against New York tax for up to ten consecutive tax years, including four separate components: a jobs tax credit, investment tax credit, research and development tax credit, and real property tax credit.2 Specifically, participants may claim a credit against income tax for each new job created in New York with respect to all but the real property tax credit.3 To qualify, a business must predominantly focus its operations in one of several designated industries.4 The new legislation expands the list of qualifying operations to include manufacturers, software developers / new media, scientific research and development businesses and agricultural businesses specifically engaged in a “green project.”5

Pursuant to the new legislation, jobs created by a qualified “green project” are eligible for increased benefits. For a green project, the available wage credit is 7.5% of gross wages, while for a non-green project, the amount remains limited to 6.85% of gross wages paid per job.6 The investment tax credit available for a non-green project remains 2% and for a green project is increased to 5% of the qualified investment.7 The research and development tax credit for a green project is raised to 8% of expenditures, compared to the original amount of 6% for non-green project participants.8

Initially slated to lapse on Jan. 1, 2030, the new legislation extends credit availability to Jan. 1, 2040.9 In addition, an additional $1 billion in funding is allocated to the program in the amount of $200 million annually for the 2025-2029 tax years.10

Hire a Veteran Credit Taxpayers who hire a qualified veteran in New York for at least one year, and for at least 35 hours each week, are generally eligible for a credit in the amount of 10% of the total amount of wages paid, up to $5,000 in any taxable year.11 For taxpayers hiring a qualified disabled veteran, the available credit is 15% of the total amount of wages paid, up to $15,000 in any taxable year.12 The taxpayer may claim the credit once the qualified veteran has completed one year of employment.13 The budget legislation extends availability of the veteran credit from taxable years beginning before Jan. 1, 2021, to taxable years beginning before Jan. 1, 2022.14

Empire State Film Production & Post Production Credit New York provides various incentives to the film industry designed to attract film production in the form of tax credits. The new legislation extends availability of the Empire State Film Production Credit through 2025 (previously, 2024).15 However, the production credit amount is decreased from 30% to 25% for qualified production costs paid or incurred in the production of a qualified film.16 Similarly, the post-production credit amount is decreased from 30% to 25% for a qualified post-production facility located within the Metropolitan Commuter Transportation District (consisting of New York City and several New York suburban counties), and from 35% to 30% for qualified post-production facilities located anywhere else in the state.17

New York Industrial and Commercial Abatement Program (ICAP) An abatement of real property taxes is generally available for the construction, alteration, or improvement of certain commercial or industrial property located in New York.18 To qualify, property owners must complete and submit a required application. Pursuant to the new legislation, the time to complete an application for benefits has been extended until March 1, 2025.19 To qualify for ICAP, a taxpayer must meet the minimum required expenditure of 30% of the property’s taxable assessed value in the tax year.20 The applicable abatement period is between eight to 25 years, depending on the project.21

Commentary Like many states, New York expects a significant decrease in budgeted revenue funds as a result of COVID-19. Earlier this month, Gov. Cuomo remarked, “the budget was difficult because the state has no money.”22 By including the extension and expansion of several tax credits in final budget legislation, it appears that New York’s legislature is at least somewhat hopeful that these business incentives will assist the state in emerging from this economic downturn.

1 S.7509B/A.9509B, Laws 2020.
2 N.Y. TAX LAW § 31(a). The real property tax credit component operates to reduce real property tax liability.
3 N.Y. TAX LAW § 355.
4 N.Y. TAX LAW § 353. To qualify, a business must operate in New York state predominantly: (a) as a financial services data center or a financial services back office operation; (b) in manufacturing; (c) in software development and new media; (d) in scientific research and development; (e) in agriculture; (f) in the creation or expansion of back office operations in the state (g) in a distribution center; (h) in an industry with significant potential for private-sector economic growth and development in this state as established in related regulations, which include job and investment criteria; (i) as an entertainment company; (j) in music production; or (k) as a life sciences company.
5 N.Y. TAX LAW § 353(l).
6 N.Y. TAX LAW § 355(1). “Green project” means a project deemed by the commissioner to make products or develop technologies that are primarily aimed at reducing greenhouse gas emissions or supporting the use of clean energy.It includes, but is not limited to, the manufacture or development of products or technologies or supply chain components primarily for renewable energy systems…vehicles that use non-hydrocarbon fuels and produce zero or near zero emissions, heat pumps, energy, energy efficiency, clean energy storage and other products that significantly reduce greenhouse gas emissions by minimizing the utilization of depletable resources or by improving industrial efficiency. “Green project” does not include a project primarily composed of (i) necessarily local activities such as retail, building construction, or the installation, deployment or adoption of a clean energy product or technology at an end user’s site, or (ii) the production of products or development if technologies that would produce only marginal and incremental energy savings or environmental benefits ancillary to the core function of the product or technology. N.Y. TAX LAW § 352, 8-a.
7 N.Y. TAX LAW § 355(2).
8 N.Y. TAX LAW § 355(3).
9 N.Y. TAX LAW §§ 31(b), 354(5).
10 N.Y. TAX LAW § 359.
11 N.Y. TAX LAW § 210-B.29(d).
12 Id.
13 N.Y. TAX LAW § 210-B.29(a).
14 N.Y. TAX LAW §§ 210-B.29(a), (b)(2); 606(a-2)(1), (2)(B); 1511(g-1)(1),(2)(B).
15 N.Y. TAX LAW §§ 24(a)(5), (e)(4); 31(a)(6).
16 N.Y. TAX LAW § 24(a)(2). Modifications are also made to the definition of “qualifying film.”
17 N.Y. TAX LAW § 31(a)(2).
18 Article 4, N.Y. TAX LAW § 489-bbbbbb.
19 Article 4, N.Y. TAX LAW § 489-dddddd(1). As modified by S.7506B/A.9506B, Laws 2020.
20 Article 4, N.Y. TAX LAW § 489-bbbbbb(3). Under the terms of this provision, an applicant who has performed commercial construction work outside of a special commercial abatement area or a renovation area is eligible for an abatement of real property taxes. Specifically, the first year of the abatement is the tax year with the first taxable status date that follows the sooner of: completion of construction; or four years from the date the first building permit was issued, or if no permit was required, the commencement of construction. For the first 11 years, the abatement is the amount of the abatement base. For the 12th through 15th years, the abatement decreases by 20% each year.
21 Article 4, N.Y. TAX LAW § 489-bbbbbb(3).
22 As Budget Passes, Cuomo Says: ‘The State Has No Money,’

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