New York R&D Tax Credit

Research and development is a key driver of new product innovation, process optimization, and business growth. To encourage business investment in such activities, New York offers R&D tax credits. But as you read on, you’ll learn there are some nuances to how this state has implemented the incentives making them different from other such programs. Take a closer look at the New York research tax credit details to know if it works for your company.

New York Research and Development Tax Credit Explained

There are two distinct New York R&D tax credits you can claim.

The Excelsior R&D Tax Credit

This credit is refundable and equivalent to 50% of the corresponding federal R&D tax credit, subject to a cap of up to 8% of QREs attributable to NY activities. For instance, for the federal credit of $200,000, the Excelsior New York R&D tax credit is $100,000 maximum. But if you have only $120,000 in NY QREs, then your excelsior credit is limited to $9,600 ($120,000 times 0.08).

Furthermore, you must conduct R&D operations in certain industries if you want to apply. Preferable sectors are those that either maintain jobs and make substantial capital expenditures or create a minimum number of new jobs in vital industries.

‍The Life Sciences R&D Tax Credit

The credit equals:

• 15% of life sciences QREs in NY for a firm with at least ten employees

• 20% of life sciences QREs in NY for a firm under ten employees.

However, keep in mind that the New York R&D credit amount is restricted to $500,000 a year ($1.5 million lifetime limit) and is available for up to three consecutive years. This incentive also doesn’t cover Contract Research expenses. Moreover, a life sciences firm must be a brand-new company to qualify. After your request is accepted, Empire State Development provides a Certificate that shows the amount approved and the year in which you may claim the credit.

How to Calculate the New York Research Tax Credit

The Excelsior R&D Tax Credit

The credit equals 50% of your federal research tax credit.

‍The Life Sciences R&D Tax Credit

The credit equals 15% or 20% of your life science QREs, depending on how many employees you have.

New York Research and Development Tax Credit: Takeaway

In addition to other benefits related to R&D activity, job development, and investment, the state offers New York R&D tax credit based on QREs similar to the Federal research tax credit. This incentive includes the Excelsior and ‍the Life Sciences tax credits.

FAQs

What kind of companies can apply?

Partnerships, LLCs, S-Corporations, C-Corporations

What is the deadline for applying?

You must submit your application with the New York Tax Return.

What data do I need to calculate credit?

Claim period New York QREs