April 24, 2014
New York State has Repealed a 5.9% State Income Tax for Manufacturing Companies
By: Matthew Cohen
As part of the final 2014-2015 budget, New York State has repealed a 5.9% state income
tax for manufacturing companies. Initially, this repeal was only applicable to upstate
manufacturers. However, the Long Island Association and the Long Island Forum for
Technology made this a top priority during the budget negotiations and pushed very hard to
ensure that this applied to Long Island manufacturers too, and now it will. The state budget also
allows for a 20% tax credit on real estate taxes for manufacturers, regardless if the company
owns or leases their facility. The LIA and LIFT also advocated for inclusion of this tax relief.
Here is how the budget discusses eligibility requirements:
- Defines "manufacturer" as a taxpayer or combined group with more than 50% of gross receipts from the sale of goods produced by manufacturing; excludes power generation and distribution, natural gas extraction and distribution, co-generated steam, film/TV/commercial production and fuel blending.
- Defines "qualified New York manufacturer" as a taxpayer or combined group that is a manufacturer with either at least $10 million or 100% of its manufacturing property in New York State; or a taxpayer with 2,500 manufacturing employees and $100 million in manufacturing property in-state.
- Limits the Article 9-A investment tax credit to "qualified NY manufacturers" and to qualified agri- and mining business;" defines qualified agri-business and mining as taxpayer/combined group with at least 50% of gross receipts from such in-state activity; eliminates the ITC for air and water pollution control equipment, security broker/dealers, investment advisory services, and film production; prohibits the ITC for property that had already served as the basis for the ITC or EZ-ITC;
- Creates a new refundable credit under Articles 9A and 22 equal to 20% of real property taxes paid by a qualified NY manufacturer; excludes PILOT payments, any RPTs deducted from ENI or federal AGI calculations, and RPTs used to calculate another tax credit. Recaptures credits if RPTs are subsequently lowered after a legal challenge or other actions.
- Reduces the Article 9-A entire net income tax rate to zero, effective 1/1/14, for a qualified New York manufacturer with a MTCD surcharge apportionment factor of zero (the bill also proposes the adoption of single sales factor apportionment for purposes of the MTCD surcharge.)
As an important manufacturer on Long Island, we wanted you to be aware of this news
and urge you to discuss with your accountants as to its specific applicability to your company.
This is great news for Long Island manufacturing companies and should help spur economic
growth by retaining and creating jobs. Let us know if you have any questions by calling Matt
Cohen at (631) 493-3002 or emailing him at email@example.com
To view the letter, click here.