New York Research and Development Tax Credit Summary

The Excelsior Jobs Program has been created in the State of New York to provide several refundable credits including the research and development tax credit.  Below is a summary of New York’s Research and development credit:

  • Taxpayers can claim up to 50% of their federal R&D credit that relate to R&D expenditures in New York State.
  • The credit is capped at 3% of qualified research expenditures conducted in the state.
  • The definition of qualified research expenditures is the same as the federal section 41 definition.
  • The R&D credit is available to strategic businesses such as bio-tech, pharmaceutical, high-tech, clean-technology; green technology, financial services, agriculture and manufacturing that create jobs or make significant capital investments.
  • Eligibility:
    • Scientific Research and Development firms creating at least 5 net new jobs.
    • Software Development firms creating at least 5 net new jobs.
    • Agriculture firms creating at least 5 new jobs.
    • Manufacturing firms creating at least 10 net new jobs.
    • Financial services (customer service) back office operations creating at least 50 net new jobs.
    • Back office firms creating at least 50 net new jobs.
    • Distribution firms creating at least 75 net new jobs.
    • Music Production firms creating at least 5 net new jobs.
    • Entertainment Companies creating at least 100 net new jobs.
    • Other firms creating at least 300 net new jobs and investing at least $6 million.
    • Firms in strategic industries that make significant capital investment that have at least 25 employee; manufacturing firms who retain at least 10 employees are also eligible to apply for participation in the Program.
  • Credit could be claimed on a timely filed return only. Consolidated Funding Application must be submitted to the appropriate local ESD (Empire State Development) regional office and the R&D Credit can be claimed upon issuance of the approval certificate.
  • To receive a certificate of tax credit for subsequent taxable years, the participant must submit a performance report demonstrating that it continues to satisfy the applicable eligibility requirements within 30 days of the end of its taxable year.
  • Every business approved for participation in the Excelsior Job Program is also eligible to apply for the jobs tax credit and investment tax credit. Some businesses may also be eligible for the real property tax credit.
  • Excess R&D Tax Credit is refundable and credit may only be claimed by eligible businesses over a 10-year period.

New York R&D Tax Credit Case Study

A New York pharmaceutical company had never before claimed the R&D credit. This project involved a multiyear study covering years 2011 thru 2014. The Company qualified for the federal R&D Tax Credit of $361,666 and an additional $42,000 of state R&D Tax Credit in New York. Summary of credits:

FEDERAL NEW YORK
Year  Total QREs Credit Total QREs Credit
2014 $1,400,000 $141,166 $1,400,000 $42,000
2013 1,000,000 98,000
2012 750,000 73,500
2011 500,000 49,000
Total  $3,650,000 $361,666 $1,400,000 $42,000

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