What's happening
This bill creates a zero percent New York State income tax rate for qualified pass-through manufacturers and excludes them from certain investment tax credits.
Why it matters
Significantly reduces state income tax for certain manufacturers. By setting a zero percent state income tax rate for “qualified pass-through manufacturers,” the bill provides a substantial financial incentive to those businesses, potentially increasing their profitability and encouraging manufacturing growth within New York State.
Encourages business structure choices. Only manufacturers organized as pass-through entities (like sole proprietorships, partnerships, LLCs treated as partnerships/sole proprietorships, or S corporations) qualify, possibly influencing how manufacturers choose to structure or reorganize their businesses to access this tax benefit.
Removes access to certain investment tax credits. Qualified pass-through manufacturers that receive the zero percent income tax rate are excluded from the state investment tax credit for property placed in service, meaning they can't “double-dip” on major state tax incentives, which could impact their investment decisions regarding equipment and property.
Phased implementation and targeted eligibility. The bill phases in the tax changes over three years (starting at 40% in 2021, 80% in 2022, and 100% in 2023), and specifically excludes businesses in the START-UP NY program and those not “principally engaged” in manufacturing (as defined by amended criteria), narrowing the scope to established manufacturing operations and preventing overlap with other major state incentive programs.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Zero Tax for Manufacturers
Plain English, a few words. Used as the page title.
Sponsors
Assembly Member · Assembly District 127
1 Multi-sponsor
History
- Referred to ways and means
- Print number 636b
- Amend and recommit to ways and means
- Print number 636a
- Amend (t) and recommit to ways and means
- Referred to ways and means
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Zero Tax for Manufacturers
In Senate Committee · Finance · Sponsor Anna Kaplan
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
636--B
2019-2020 Regular Sessions
IN ASSEMBLY (Prefiled)
January 9, 2019
Introduced by M. of A. STIRPE, PALMESANO, SCHIMMINGER, WOERNER, McDO- NALD, WALLACE -- Multi-Sponsored by -- M. of A. MANKTELOW -- read once and referred to the Committee on Ways and Means -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- again reported from said committee with amendments, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the tax law, in relation to pass-through manufacturers zero percent tax rate
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subsection (b) of section 612 of the tax law is amended by adding a new paragraph 42 to read as follows:
(42) Any income, gain, loss and deduction, to the extent it is included in federal adjusted gross income and is, when combined and combined with additions for federal deprecation required by paragraph eight of this subsection and subtractions for New York allowed by subsection (k) of this section, less than zero, of an individual or trust from a qualified pass-through manufacturer, as defined in paragraph forty-three of subsection (c) of this section.
§ 2. Paragraph 39 of subsection (c) of section 612 of the tax law, as added by section 1 of part Y of chapter 59 of the laws of 2013, is amended and a new paragraph 43 is added to read as follows:
(39) In the case of a taxpayer who is a small business who has business income and/or farm income as defined in the laws of the United States, an amount equal to three percent of the net items of income, gain, loss and deduction attributable to such business or farm entering into federal adjusted gross income, but not less than zero, for taxable years beginning after two thousand thirteen, an amount equal to three and three-quarters percent of the net items of income, gain, loss and deduction attributable to such business or farm entering into federal
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00656-03-9
A. 636--B 2
adjusted gross income, but not less than zero, for taxable years beginning after two thousand fourteen, and an amount equal to five percent of the net items of income, gain, loss and deduction attributable to such business or farm entering into federal adjusted gross income, but not less than zero, for taxable years beginning after two thousand fifteen. For the purposes of this paragraph, the term small business shall mean a sole proprietor or a farm business who employs one or more persons during the taxable year and who has net business income or net farm income of less than two hundred fifty thousand dollars. For the purposes of this paragraph, the term small business shall exclude any business that is a qualified pass-through manufacturer, as defined in paragraph forty-three of this subsection for the current tax year.
(43) (A) Any income, gain, loss and deduction, to the extent included in federal adjusted gross income and is, when combined and combined with additions for federal deprecation required by paragraph eight of this subsection and subtractions for New York allowed by subsection (k) of this section, greater than zero, of an individual or trust from a qualified pass-through manufacturer. Income from a qualified pass-through manufacturer shall include wages of an individual controlling ten percent or more of the qualified business or entity. Income or loss from a qualified pass-through manufacturer shall not include an amount representing reasonable compensation for personal services, as defined in the internal revenue code section one hundred sixty-two regulations, for an individual controlling ten percent or more of the qualified business or entity.
(B) The qualified pass-through manufacturer may be organized as a sole proprietorship, a partnership, a limited liability company electing to be treated as a partnership or sole proprietorship, or an S corporation.
(C) For the purposes of this subsection, the term qualified passthrough manufacturer shall mean a business that is a qualified New York manufacturer, as defined by subparagraph (vi) of paragraph (a) of subdivision one of section two hundred ten of this chapter, except that the term "gross receipts" shall be replaced by "business receipts" in determining whether the business is "principally engaged" in manufacturing. A qualified pass-through manufacturer shall not include a business that is currently participating in the START-UP NY program.
§ 3. Paragraph 2 of subsection (a) of section 606 of the tax law is amended by adding a new subparagraph (B-1) to read as follows:
(B-1) Property placed in service during the tax year that is otherwise eligible for the investment tax credit described in subparagraph (A) of this paragraph, will not be eligible for the investment tax credit if the use of the property is by a qualified pass-through manufacturer, as defined in paragraph forty-three of subsection (c) of section six hundred twelve of this article for the current tax year.
§ 4. Subdivision 1 of section 210-B of the tax law is amended by adding a new paragraph (g) to read as follows:
(g) Property placed in service during the tax year that is otherwise eligible for the investment tax credit described in this subdivision, will not be eligible for the investment tax credit if the use of the property is by a qualified New York manufacturer, as defined in subparagraph (vi) of paragraph (a) of subsection one of section two hundred ten of this article for the current tax year.
§ 5. For purposes of determining the modifications of paragraphs 39 and 43 of subsection (c) of section 612 of the tax law and the investment tax credit disallowance of subparagraph (B-1) of paragraph 2 of subsection (a) of section 606 of the tax law, the amounts shall be
A. 636--B 3
multiplied by the following percentages: (a) for tax years beginning on or after January 1, 2021: forty percent; (b) for tax years beginning on or after January 1, 2022: eighty percent; and (c) for tax years beginning on or after January 1, 2023: one hundred percent.
§ 6. This act shall take effect immediately and shall apply to tax years beginning on or after January 1, 2021.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.