There is a significant tax credit available to certain taxpayers doing business in New York State that, in many cases, may go unclaimed: the Investment Tax Credit (ITC). The credit amount ranges from 4% to as much as 9% of the cost of property placed in service in New York. In addition, the credit can be enhanced in subsequent years by an employment incentive credit which provides an additional 1.5% to 2.5% of the ITC.
What businesses are eligible for the credit? A variety of industries are eligible, including manufacturing, retail, research and development, film production, and financial services, as well as others.
What property qualifies for the credit? Generally, any property or equipment you place in service in New York that is principally used in your business. Qualifying property may vary by industry. For example, let’s say you’re a manufacturer, and you purchase a machine for use in your production facility. By claiming that equipment as an investment in your business, you can receive a credit against NY taxes.
What if I can’t use the credit in the year I placed property in service? Not to worry, you can carry the credit forward for up to 15 years (10 if you are an S Corporation shareholder). If you qualify as a “new business”, you can even take the credit as a refund.
If you are planning to invest in your business in New York, you really do need to factor the value of this credit into the amount of your investment. That being said, there is quite a bit of complexity involved in correctly identifying qualifying property and claiming the ITC. If you need assistance with navigating the rules, or would like to hear more details on the ITC, contact us.
Evan Piccirillo is a Tax Supervisor in Raich Ende Malter & Co. LLP’s Long Island office. Evan specializes in high net worth individuals, as well as closely-held corporations, S-Corporations, and small businesses.
Contact Evan at firstname.lastname@example.org or (516) 228-9000.