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What to Know About New York R&D Tax Credit Opportunities

Posted by Jeffrey Feingold on 01.20.22

The New York research and development (R&D) tax credit represents an outstanding opportunity for taxpayers to receive credit for qualified research expenses they conduct. While New York does not have a stand-alone R&D tax credit program like many other states, the opportunity for valuable tax credits exists within the state’s overall Excelsior Jobs Program. And keep in mind, this tax-saving incentive is in addition to the federal R&D tax program, which Congress made permanent in 2015.

See related blog: PATH Widens for R&D Tax Credit Opportunities

As one of several refundable credits available in the state of New York to reduce income tax, the New York Excelsior R&D credit program is one of the best tax credits in the Northeast. New York’s Excelsior Jobs Program encourages businesses to expand in and relocate to New York while maintaining strict accountability standards to guarantee that businesses deliver on job and investment commitments.

To qualify for any of the five programs under the New York Excelsior Jobs Program, businesses must meet and maintain certain established job and investment thresholds.

Excelsior Jobs Program Eligibility

To qualify for the New York Excelsior Jobs Program, which includes R&D tax credits, projects must meet the criteria for job creation, job retention and significant capital investment. The following additional eligibility rules apply:

Scientific R&D 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 5 net new jobs; manufacturing firms who retain at least 5 employees are also eligible to apply for participation in the Program
Financial services (customer service) back office operations creating at least 25 net new jobs
Back office firms creating at least 25 net new jobs
Distribution firms creating at least 50 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 250 net new jobs and investing at least $3 million
Life Sciences Companies creating at least 5 net new jobs
Firms in strategic industries exclusive of Music Production and Entertainment that make significant capital investment that have at least 25 employees

The Excelsior Jobs Program, which includes R&D tax credits, will provide job creation and investment incentives to firms in such targeted industries as:

Biotechnology
Pharmaceutical
Clean/Green technology
Financial services
Agriculture

New York R&D Tax Credit Program Highlights

A credit of 50% of the portion of the Federal Research and Development tax credit that relates to expenditures in NYS up to credit up to 6% of research expenditures attributable to activities conducted in NYS
Businesses can claim the credits over a benefit period of up to 10 years as established in the preliminary schedule of benefits
The definition of qualified research expenditures is the same as the federal section 41 definition

In addition to R&D tax credits, every business approved for participation in the Excelsior Jobs Program is also eligible to apply for four other tax credits, including:

Excelsior Jobs Tax Credit: A credit of 6.85% of wages per net new job
Excelsior Investment Tax Credit: Valued at 2% of qualified investments
Excelsior Real Property Tax Credit: Available to firms locating in certain distressed areas and to firms in targeted industries that meet higher employment and investment thresholds
The Excelsior Childcare Services Tax Credit: A credit of up to 6% of net new child care services expenditures for the operation, sponsorship or direct financial support of a childcare services program.

How to Apply

Applicants interested in the Excelsior Jobs Program should contact their Regional Office
Applicants may also complete New York State’s Consolidated Funding Application that will be submitted to the local ESD regional office

Find Out if Your Activities Qualify

The R&D tax credit can be a lucrative incentive for innovative businesses in New York. Given the new permanent nature of the federal tax credit, now is the time to consider whether activities performed by your company qualify for major cash-saving federal and state tax credit opportunities.

Request a free assessment to determine qualifying R&D tax credit eligibility.

Tax Point Advisors, a firm with expertise in working with small and midsize companies, works with businesses that may qualify for R&D tax benefits. For more information, read our e-book: The Business Owner's Guide to R&D Tax Credits .

You may also contact us at (800) 260-4138, or please leave us a message below.

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Looking for a First-Class R & D tax credit advisor?

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 credit equals 50% of your federal research 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.

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

R&D Tax Credits by State:

Utah research and development tax credit Massachusetts R&D tax credit Indiana research and development tax credit New York research and development tax credit Arizona R&D tax credit Arkansas research and development tax credit Kentucky research tax credit Maine R&D tax credit Hawaii R&D tax credit Alaska research and development tax credit

Connecticut R&D tax credit Iowa R&D tax credit South Carolina research and development tax credit California research tax credit New Mexico R&D tax credit Mississippi R&D tax credit Ohio R&D tax credit Illinois R&D tax credit Georgia research tax credit Virginia research tax credit

North Dakota research tax credit Louisiana research tax credit Wisconsin R&D tax credit Maryland research tax credit Rhode Island research tax credit Delaware research and development tax credit Nebraska research tax credit Michigan research tax credit Pennsylvania research tax credit Colorado R&D tax credit

Idaho research tax credit Florida research tax credit Alabama research tax credit New Jersey research tax credit Kansas R&D tax credit New Hampshire research and development tax credit Texas R&D tax credit Vermont R&D tax credit Minnesota research and development tax credit