New York State Corporate Tax Return

In 2014, New York State passed legislation for a major overhaul of New York State Corporate taxation.  It’s seen as one of the largest reforms to corporate taxation in New York in half a century and includes both broad changes affecting most businesses as well as targeted incentives for certain business types.

Some of the major changes include:

  • Eliminating the corporate AMT base, one of the four different tax bases for calculating corporate tax. Phasing out the capital stock base over six years, ultimately limiting the overall tax bases to two.  Additionally, the corporate tax on net income has been lowered from 7.1% to 6.5% and the fixed dollar tax has been raised to a maximum of $200,000.
  • Prior to the changes, corporate tax payers would have paid the highest of one of the four bases: 7.1% tax on net income; 0.15% tax on capital base (up to a maximum of $1 million; 1.5% alternative minimum tax; or a fixed dollar tax of up to $5,000.
  • With the new changes, a corporation will pay the higher of: 6.5% of their net income, a fixed dollar tax ranging from $25 up to $200,000 based on their gross receipts, or a shrinking percentage of their capital stock ranging from 0.15% – 0.025% depending on the year between 2014 – 2020.  In 2021, the capital stock base will be eliminated entirely, leaving only the net income and fixed dollar tax bases.
  • Merging the Bank Franchise Tax article (formerly Article 32) into the Corporate Franchise Tax article (Article 9-A).  The prior two article system led to unintended divergences in the law.  By merging these two articles, the law can be applied uniformly.
  • Estate tax reform leading to an exemption amount up from $1 million to $2 million starting on deaths occurring on or after April 1, 2014.  The amount will steadily rise until January 1, 2019, at which point it will be equal to the federal exemption amount in 2019.  As of April 1, 2014, the Generation Skipping Tax is repealed as well.  The table below provides the schedule for the New York State estate tax exemption amount:

Year

Exclusion

Prior to April 1, 2014 $1,000,000
April 1, 2014 through March 30, 2015 $2,062,500
April 1, 2015 through March 30, 2016 $3,125,000
April 1, 2016 through March 30, 2017 $4,187,500
April 1, 2017 through December 31, 2018 $5,250,000
January 1, 2019 and forward $5,800,000 (estimated)