Are R&D Tax Credits Available in New York?
Yes. The state of New York provides the Excelsior Jobs Program which offers several refundable credits including the Research and Development (R&D) Tax Credit. Below is a summary of New York's Excelsior Research and Development Tax Credit:
- Taxpayers can claim up to 50% of their federal R&D credit that relate to R&D expenditures in New York State.
- The credit is capped at 6% of qualified research expenditures (QREs) conducted in the state or 8% for qualified green projects
- The definition of QREs is the same as the federal section 41 definition, except that costs must be incurred in New York to qualify for the New York research credit.
- The credit can only be claimed if the business has received a certificate of tax credit from the Empire State Development (ESD), which involves submitting a performance report demonstrating it satisfies eligibility requirements.
- Excess R&D Tax Credit is refundable and credit may only be claimed by eligible businesses over a 10-year period once they receive the certificate.
- Credit could be claimed on a timely filed return only. Consolidated Funding Application must be submitted to the appropriate local ESD (Empire State Development) regional office and the R&D Credit can be claimed upon issuance of the approval certificate.
- Taxpayers who are not eligible, or choose not to participate in the Excelsior Jobs Program, may be eligible to participate in the Life Sciences Research and Development Tax Credit Program.
- Taxpayers in certain fields and industries, including medical or veterinary laboratory testing facilities, are not eligible to claim the research credit.
New York R&D Tax Credit Case Study
A pharmaceutical company in New York had never before claimed the R&D credit. This project involved a multiyear study covering the years 2017 thru 2020.
The Company qualified for the federal R&D Tax Credit of $361,666 and an additional $42,000 of state R&D Tax Credit in New York.
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FEDERAL
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NEW YORK
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Year
|
Total QREs
|
Credit
|
Total QREs
|
Credit
|
||
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2020
|
$1,400,000
|
$141,166
|
$1,400,000
|
$42,000
|
||
|
2019
|
1,000,000
|
98,000
|
NA
|
NA
|
||
|
2018
|
750,000
|
73,500
|
NA
|
NA
|
||
|
2017
|
500,000
|
49,000
|
NA
|
NA
|
||
| Total | $3,650,000 | $361,666 | $1,400,000 | $42,000 | ||
You can read more about this New York tax credit case study here.