New York State R&D Tax Credit

New York State R&D Tax Credit

R&D State Tax Credit is not available, but other lucrative state incentives are available

Businesses can take advantage of the Research and Development Tax Credit in the state of New York on a federal level. Within the state of New York, companies that are performing qualifying research and development can take advantage of the extremely cost-effective credit to offset costs spent performing the research activities. The credit is often overlooked by companies simply because they don’t realize their work qualifies them.

The state of New York currently has no direct incentives to take advantage of the Research and Development on a state level, however, they have several other lucrative credits that are related to R&D activities like the New York State Investment Tax Credit (ITC), New York Excelsior Jobs Program R&D Tax Credit, New York Qualified Emerging Technology Companies (QETC), and the Life Sciences Research & Development Tax Credit.

State Credit Available that are Related to R&D Activities

New York State Investment Tax Credit (ITC) 

The New York State Investment Tax Credit gives businesses the opportunity to have an optional Investment Tax Credit on R&D qualified investments. While this does not cover everything, companies can take advantage of this if their investments meet the requirements. A few benefits of this are:  

• The Investment Tax Credit comes out to be 9% of a qualifiable investment in R&D personal properties (tangible) and R&D buildings
• This is taken in lieu of the normal Investment Tax Credit
• The Investment Tax Credit has the ability to reduce tax on the higher of the fixed dollar or the minimum tax. 
• New businesses have the opportunity to take a refund of any unused credit related to this tax credit. 
• Credits that go unused have the ability to be rolled over for up to 15 years for businesses or if you are a personal income taxpayer, 10 years.

New York Excelsior Jobs Program R&D Tax Credit

The New York Excelsior Job Program was set into place to give businesses an incentive for job creation in targeted industries like clean-technology, agriculture, manufacturing, pharmaceutical, and biotechnology. This program allows firms within those specific industries to expand and move to New York while maintaining a return on their investment in job creation. 

This program has an R&D specific qualifier that allows businesses to claim a refund of 50% of the Federal R&D credit and up to 3% of the expenses for R&D done in New York State.

New York Qualified Emerging Technology Companies (QETC)

The New York Qualified Emerging Technology Companies credit is a limited Employment Tax Credit in New York that gives businesses to get up to $1,000 per full-time employee. This credit is only available for 3 consecutive years and has several specific requirements. Businesses who qualify must be a company located in the state of New York with a total annual product sales of $10 million or less. Every qualifying business must also provide primary services or products that are:

• Advanced materials or processing technologies 
• Based on purposes of engineering, production or defense
• Electronic and photonic devices and/or components in nature
• Communicative or informative technologies in nature 
• Bio- or nano-technologies in nature
• Technologies based in re-manufacturing

Or, the business is a company that produces R&D activities within the state of New York, and the funds allocated towards the net sales are equal to or exceeds the most recent average as provided by the National Science Foundation. Businesses who are able to claim this credit are able to receive:

• 10% of their qualifiable investments in a QETC service that has a useful life of 4 years.  
• 20% of their qualifiable investments in a QETC service that has a useful life of 9 years. 

Life Sciences Research & Development Tax Credit

The state of New York offers an R&D credit to Life Sciences companies based in New York. These companies are eligible for this R&D credit if they: 

• Are a life sciences company in nature 
• Are a new business 
• Have conducted and funded R&D qualifying activities in the state of New York 
• Have been given a tax credit certificate issued by the Empire State Development. 

This credit qualifies businesses for 15% of the R&D expenses for activities that happened in the state of New York and who employ 10 or more persons. For companies that employ less than 10 persons, they qualify for 20%.

This credit is currently only available until January 1, 2028, and only for 3 consecutive years with a $500,000 per year cap and a $1.5 million lifetime cap per company. This program has a yearly cap of $10 million for the entire program.  

Federal R&D Tax Credit Program Highlights

While state R&D tax credits may be limited to specific programs in New York, every qualifying business still has the opportunity to take advantage of the Federal R&D Tax Credit which offers several highlights: 

• Every year, more than $7.5 billion in federal R&D credits are given out to companies across the United States.
• The Research and Development Tax Credit provides cash incentives through the form of credits for companies performing research activities in the United States.
• The credit offsets cost spent performing research activities against federal tax liabilities.
• Tax credits may be carried forward as far as 20 years.
• The credit can be taken by a business on all open tax years, typically the last three or four years, plus the current year.
• The credit creates a significant reduction in current and future federal tax liabilities.
• All companies can potentially benefit from the tax credit if qualifying research activities are taking place.

.

The Research and Development Tax Credit

R&D is a dollar for dollar tax credit that can be claimed by companies in the United States to offset costs spent performing research and development to benefit their business. Created as an incentive by the United States Government for businesses to undergo research activities to develop or improve their products, processes, or software, The R&D credit was made permanent on a federal level by the Protecting Americans Against Tax Hikes Act of 2015, allowing business owners to ensure their research activities would earn them the lucrative credit. The PATH Act also broadens the variety of industries that are able to claim the credit.

How to Apply

Claiming your R&D tax credits is made simple by our team at National Tax Group. During your call, we’ll determine if your research activities qualify your company to take advantage of the R&D Tax Credit Program. We’ll provide the proper documentation and remain by your side until all documentation is submitted and approved by the Internal Revenue Service. In the highly unlikely event of an audit, we will supply all materials needed to clear it at no extra cost for you. Contact our tax experts to get started.