Taxation Summary of Executive Budget and Senate/Assembly Budget Resolutions

Staff contact: ken.pokalsky@bcnys.org

Income Taxes

ISSUE EXECUTIVE BUDGET SENATE ONE HOUSE ASSEMBLY ONE HOUSE FINAL BUDGET
“Millionaires Tax” Extends the top PIT rate of 8.82% thru 2020 tax year

Restructures the PIT brackets and adopts rate reductions for income between $27,900 and $323,000 Revenue Article VII Bill Part R
Executive Budget proposal omitted. Executive Budget proposal omitted.

Adopts new brackets for income over $1 million, effective 1/1/18
- 8.82% for income between $1 and $5 million.
- 9.32% for income between $5 and $10 million.
- 9.82% for income between $10 and $100 million.
- 10.32% for income over $100 million.

Adopts a new “alternative tax table benefit recapture” program.

Makes permanent the CPI adjustment of the standard deduction. A.3009-B, Part TT
 
Federal Sub-S Conformity Eliminates Article 9-A Sub-S election; requires federal sub-S corporations to be treated as S corporations for New York State tax purposes.

Revenue Article VII Bill Part Y
Executive Budget proposal omitted. Executive Budget proposal omitted.  
Non-Resident Asset Sales Treats as NY source income the gains from the sale of an interest in a partnership by nonresident partners when the underlying transaction reflects a sale of partnership assets subject to Internal Revenue Code (IRC) § 1060.

Revenue Article VII Bill Part AA
Executive Budget proposal omitted. Executive Budget proposal omitted.  
Small Business Tax Relief Not addressed Under Article 9-A, adopt small business rate of 4% for 2018 and 2.5% thereafter; applies to taxpayers with income base under $400,000; phases out for taxpayers with income base up to $500,000.

Under Article 22, increases the business income exclusion from 5% to 10% in 2018 and 19% in 2019; makes the exclusion available for members/partners/shareholders of LLCs, partnerships and sub-S corps in addition to sole proprietors; applicable where the taxpayer has net business or farm income under $500,000 and where the income is derived from an entity with gross business income under $1.5 million (or $250,000 for a farm business.)

S.2009-B, Part SS
Under Article 9-A, adopt small business rate of 4% for 2018 and thereafter; applies to taxpayers with income base under $290,000; phases out for taxpayers with income base up to $390,000.

Under Article 22, increases the business income exclusion from 5% to 15% effective 1/1/18; makes the exclusion available for members/partners/shareholders of LLCs, partnerships and sub-S corps in addition to sole proprietors; applicable where the taxpayer has net business or farm income under $250,000 and where the income is derived from an entity with gross business income under $1.5 million (or $250,000 for a farm business.)

A.3009-B, Part SS
 
Fulfillment Services Not addressed. Provides that foreign corporation is not doing business in NYS for Article 9A purposes by reason of using an in-state “fulfillment service”, provided that the taxpayer’s receipts from such service do not exceed $1 million; provides a definition of fulfillment service.

S.2009-B, Part AAA
Not addressed.  
QFI for RICs and REITs Not addressed. Under Article 9A and the NYC Corporate Tax of 2015, provides a new definition of qualified financial instruments for non-captive RICs and REIT; and provides a new fixed dollar minimum schedule for such entities.

S.2009-B, Part AAA
Not addressed.  
Business Capital Not addressed. Under Article 9A, excludes from the definition of “business capital” assets that produce dividends that are exempt unitary corporation dividends.

S.2009-B, Part BBB
Not addressed.  
MTA Surcharge Not addressed. Freezes the Article 9A Metropolitan transportation business tax surcharge on and after 1/1/2021.

S.2009-B, Part JJJ
Not addressed.  
“Millionaires Tax” Extends the top PIT rate of 8.82% thru 2020 tax year

Restructures the PIT brackets and adopts rate reductions for income between $27,900 and $323,000 Revenue Article VII Bill Part R
Executive Budget proposal omitted. Executive Budget proposal omitted.

Adopts new brackets for income over $1 million, effective 1/1/18
- 8.82% for income between $1 and $5 million.
- 9.32% for income between $5 and $10 million.
- 9.82% for income between $10 and $100 million.
- 10.32% for income over $100 million.

Adopts a new “alternative tax table benefit recapture” program.

Makes permanent the CPI adjustment of the standard deduction. A.3009-B, Part TT
 

Sales Tax

ISSUE EXECUTIVE BUDGET SENATE ONE HOUSE ASSEMBLY ONE HOUSE FINAL BUDGET
Marketplace Providers Requires “marketplace providers” to collect sales tax on sales of tangible personal property it facilitates; marketplace provider defined as providing the sales forum and collects receipts on behalf of a seller.

Revenue Article VII Bill Part BB.
Executive Budget proposal omitted. Executive Budget proposal adopted.  
Sales Between Related Entities Imposes sales tax on (1) sales to single member LLCs or subsidiaries for resale to a member or owner; (2) sales to a partnership for resale to one or more partners; and (3) sales to a trustee for resale to a trust beneficiary.

Eliminates the sales tax exemption for out of state purchases by non-resident entities (other than individuals) of articles used in NYS, unless the non-resident had been doing business outside NYS for at least 6 months.

Revenue Bill Part CC.
Executive Budget proposal omitted. Executive Budget proposal adopted.  
Energy T&D Services “Clarify the sales tax applies to the transporting and delivery of natural gas and electricity when transportation or distribution is delivered by the provider of the commodity.

Revenue Bill Part DD.
Executive Budget proposal omitted. Executive Budget proposal adopted.  
Vendor Credit Not addressed. Increases the maximum quarterly vender credit from $200 to $400, effective 3/1/18.

S.2009-B, Part CCC
Not addressed.  

Tax Credits

ISSUE EXECUTIVE BUDGET SENATE ONE HOUSE ASSEMBLY ONE HOUSE FINAL BUDGET
Life Science Credits Includes life science businesses in existing Excelsior Jobs credit program.

Creates new refundable R&D credit for life sciences; credit is 15% of IRC R&D investments (20% for small business); capped at $500,000 per taxpayer and $10 million in aggregate per year.

Revenue Bill Part K.
Executive Budget proposal adopted, except that the Senate would sunset both provisions 1/1/28.

S.2009-B, Part K.
Executive Budget proposal omitted.  
Investment Tax Credit Modifies the Article 9A and 22 investment tax credit to exclude property used in the production and distribution of electricity, gas, steam or water; and to exclude costs incurred out of state related to creation or reproduction of films or audio or visual recordings.

Revenue Article VII Bill Part P.
Executive Budget proposal omitted. Executive Budget proposal adopted.

Increases the Article 9A ITC rate for research and development properties from 7 to 14%.

A.3009-B, Part UU
 
StartUp NY Program Renamed “Excelsior Business Program.”

Program reoriented to apply to true start up companies.

Eligibility limited to “new business,” defined as: not having generated net income prior to application; not publicly traded; no more than 25 employees; others.

Participants shall be eligible for credit based on wages of new employees; remaining credits – ITC, R&D and RPT – are at discretion of ESDC.

Public Protection/General Government Article VII bill, S.2005/A.3005, Part X
Executive Budget proposal omitted.

Would close the program to new applications effective 4/1/18.

S.2005-B, Part X.
Executive Budget proposal omitted.

Assembly requires that the program’s annual report include data and information related to specific program years, and identifying the number of net new jobs and any net new jobs subsequently lost.
 
Disregarded Entities Provides that that single member LLC treated as disregarded entities for federal tax purposes is disregarded for determining eligibility of NYS tax credits.

Revenue Article VII Bill Part Q.
Executive Budget proposal adopted; with additional language allowing a taxpayer election to treat multiple LLCs that are separately certified under the Empire Zone program as separate entities. Executive Budget proposal adopted.  
Workforce Training Credits Modifies the 2015 workforce training job credit; expands the credit to include life science companies.

Revenue Article VII Bill Part L
Executive Budget proposal omitted. Executive Budget proposal adopted.  
Film Production Credit Extends the film credit, the upstate bonus credit and the post production credit for 3 years, thru 2022; eliminates Suffolk county from eligibility for bonus credit.

Revenue Article VII Bill Part M.
Executive Budget proposal adopted; except that they maintain Suffolk county eligibility for the bonus credit. Executive Budget proposal adopted.  
Youth Jobs Credit Extends the youth jobs credit at current levels through tax year 2022.

Revenue Article VII Bill Part N.
Executive Budget proposal omitted. Adopts the Executive Budget’s program extension through tax year 2022; modifies the distribution of tax credits for years six through ten; adopts a new refundable construction industry apprenticeship tax credit program for 2018 through 2022 tax years; applies to Articles 9A and 22; credit of up to $10 million in credits available annually; credits range from $2000 to $4000 per year per apprentice.  
Alternative Fuels/EV Credit Extends the alternative fuels property and EV recharging property tax credits through 2022.

Revenue Article VII Bill Part O
Executive Budget proposal omitted. Executive Budget proposal adopted.  
Manufacturer’s RPT Credit Not addressed. Under Articles 9A and 22, Increases the real property tax credit for qualified manufacturers from 20% to 50%; the Article 22 credit remains refundable; the Article 9A credit is not.

S.2009-B, Part TT
Not addressed.  
Investment Tax Credit Not addressed. Makes the Article 9A and Article 32 investment tax credit refundable for taxpayers whose primary source of income is derived from a farm operation (as defined in Section 301 of the Agriculture and Markets Law. Effective 1/1/17

S.2009-B, Part VV
Not addressed.  
Excelsior Jobs Credit Not addressed. Not addressed. Increases the R&D tax credit from 3 to 6%.

Reduces the job creation thresholds for “regionally significant projects” to 10 for manufacturers, agricultural businesses and scientific and R&D firms; 100 for financial services and back office operations; and 150 for other businesses.

Reduces the general job creation thresholds to 5 new jobs for manufacturers; 25 for financial services and back office operations; and 50 for distribution centers.

Defines “significant capital investment” as $1 million for manufacturers; $3 million for financial services, R&D and other businesses; $15 million for distribution centers; and $250,000 for agricultural businesses.

A.3009-B, Part WW
 
NY Agriculture and Rural Jobs Credit Not addressed. Not addressed. Creates a new rural jobs investment program and tax credit.

Allows the Department of Tax and Finance to certify “rural business growth funds” that have solicited private capital for investment in rural business. DTF can certify up to $65 million in credit eligible capital.

A rural business growth fund must invest 60% of its capital within 2 years and 100% within 3 years.

Tax credits under Article 9 and 9A are equal to “credit eligible capital contributions;” 25% of the credit can be claimed in year 3, 20% in years 4 and 5; credits are nonrefundable but can be carried forward.

Eligible rural businesses must have fewer than 250 employees, less than $15 million in net income, have primary business operations in NYS and be either located in a designated rural area or provide goods or services used by agricultural businesses. Eligible rural businesses can receive up to $7.5 million in capital investments.

A.3009-B, Part FFF
 
Minimum Wage Reimbursement Credit Not addressed. Modifies the credit to apply to employees paid up to $0.50 above the minimum wage, and extends the credit through 12/31/19.

S.2009-B, Part XX
Not addressed.  
STAR Exemption Not addressed. Extends the School tax relief (STAR) real property tax exemption to small business, defined as a sole proprietor, LLC, partnership or NY Sub-S corporation with 20 or fewer employees and gross business income under $350,000, or a corporation with 20 or fewer employees and gross business income under $500,000.

S.2009-B, Part YY
Not addressed.  
Rehabilitation of Distressed Commercial Property Not addressed. Under Articles 9A and 22, creates a non-refundable credit for expenses related to the rehabilitation of distressed commercial properties; the credit is 30% of qualified expenditures up to $100,000 per taxpayer.

S.2009-B, Part FFF
Not addressed.  
Forest Stewardship Credit Not addressed. Under Articles 9A and 22, creates a new refundable credit of 25% of real property taxes paid, up to $10,000 per taxpayer, on property subject to a forestry stewardship or habitat conservation agreement with the Department of Environmental Conservation.

S.2009-B, Part AAAA
Not addressed.  
College Debt Freedom Account Not addressed. Under Articles 9A, 22 and 33, creates a tax credit equal to an employer’s contributions of matching funds for an employee’s pre-tax payments to college loan repayment fund, provided the match is at least 50% of the employee’s payments; up to $2500 per employee per year.

S.2009-B, Part JJJJ
Not addressed.  

Other Provisions

ISSUE EXECUTIVE BUDGET SENATE ONE HOUSE ASSEMBLY ONE HOUSE FINAL BUDGET
Real Property Transfer Tax Extends the real property transfer tax and the additional RPTT on sales over $1 million to transfers of LLCs, partnerships, S corps and non-publicly traded C corps when their NYS real property equals or exceeds 50% of the entities assets.

Revenue Article VII Bill Parts JJ and KK.
Executive Budget proposal omitted. Executive Budget proposal adopted.  
Partial Payment of RPT Authorizes all taxing entities to accept partial payment of real property taxes, unless local legislature opts out (current law requires local authorization of partial payments.)

Revenue Article VII Bill Part F
Executive Budget proposal omitted. Executive Budget proposal adopted.  
Oil/Gas Production Charges Extends the state production charge on oil and gas wells through 3/31/21.

Revenue Article VII Bill I
Executive Budget proposal omitted. Executive Budget proposal adopted.  
Pre-Paid Wireless Surcharge Imposes a public safety communications surcharge on providers of pre-paid wireless services.

Revenue Article VII Bill Part EE.
Executive Budget proposal omitted. Executive Budget proposal adopted.  
Tobacco Products Extends the tobacco tax to nicotine-containing vapor products (also extends tobacco rules to vapor products.)
Revenue Article VII Bill Part FF.

Authorizes “jeopardy assessments” for tobacco tax liabilities. Revenue Article VII Bill Part HH.

Adopts a $0.45 tax per cigar.

Revenue Article VII Bill Part II.
Executive Budget proposal omitted. Executive Budget proposal adopted.  
MTA Mobility Tax Not addressed. Increases threshold for applicability of the MTA mobility tax for self-employed individuals from $50,000 to $250,000.

S.2009-B, Part HHH
Not addressed.  
Real Property Tax Cap Not addressed. Makes the real property tax cap permanent.

S.2009-B, Part BBBB
Not addressed.