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

Industries

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
• High-tech
• Clean/Green technology
• Financial services
• Agriculture
• Manufacturing

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.