What's happening
This bill allows small businesses in New York to create tax-deferred savings accounts for qualifying business expenses, with related tax benefits and reporting requirements.
Why it matters
Encourages Small Business Investment. By allowing tax-deferred savings for qualified business expenditures like equipment or property, the bill incentivizes small businesses to reinvest in their operations, potentially boosting productivity and competitiveness.
Targeted Economic Development. The program specifically supports investments that create or retain full-time jobs, aligning tax benefits with broader goals of economic growth and employment stability in New York.
Strict Usage and Oversight. Withdrawals must be for qualifying purposes, or the deferred taxes become due, ensuring the accounts are used to genuinely support business needs rather than as general tax shelters; annual reporting and oversight by state agencies are required for transparency.
Limited Scope and Accessibility. With a cap of $5,000 in deposits per year, the program is designed for modest, incremental savings, making it more accessible to very small businesses but less impactful for larger-scale capital needs.
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Who cares
Headline styles
Let Small Businesses Save Tax-Free
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 7
1 Co-sponsor
History
- Print number 2412b
- Amend and recommit to finance
- Reported and committed to finance
- Print number 2412a
- Amend and recommit to commerce, economic development and small business
- Referred to commerce, economic development and small business
- Reported and committed to finance
- Referred to commerce, economic development and small business
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.
Let Small Businesses Save Tax-Free
In Assembly Committee · Ways And Means · Sponsor Steve Stern
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2412--B
2019-2020 Regular Sessions
IN SENATE
January 24, 2019
Introduced by Sens. KAPLAN, SANDERS -- read twice and ordered printed, and when printed to be committed to the Committee on Commerce, Economic Development and Small Business -- recommitted to the Committee on Commerce, Economic Development and Small Business in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- reported favorably from said committee and committed to the Committee on Finance -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the economic development law and the tax law, in relation to authorizing the creation of small business tax-deferred savings accounts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The economic development law is amended by adding a new section 138-a to read as follows:
§ 138-a. Small business tax-deferred savings accounts. 1. A "small business taxpayer" or "small business" shall have the same meaning as defined in section one hundred thirty-one of this article and shall meet the requirements of paragraph (f) of subdivision one of section two hundred ten of the tax law.
2. Any small business shall be authorized to establish with any financial organization a small business tax-deferred savings account and to make deposits into and withdrawals from such account. For purposes of this section, "financial organization" shall mean an organization authorized to do business in the state of New York and (a) which is licensed or chartered by the department of financial services, (b) is chartered by an agency of the federal government, or (c) is subject to the jurisdiction and regulation of the securities and exchange commission of the federal government.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08519-04-0
S. 2412--B 2
3. The amount deposited into such tax-deferred savings accounts and any interest earned on such deposits shall be subject to the provisions of subparagraph twenty-one of paragraph (a) of subdivision nine of section two hundred eight and paragraph forty-three of subsection (c) of section six hundred twelve of the tax law, unless such amounts are withdrawn and expended for a purpose other than a qualifying purpose.
4. For the purposes of this act, a qualifying purpose shall include small business taxpayer expenditures (a) for tangible personal property or other tangible property, including but not limited to buildings and structural components of buildings, that are principally used in the ordinary course of the taxpayer's trade or business and (b) other expenditures deemed appropriate by the department, which will improve the competitiveness and productivity of a small business and results in the creation or retention of full-time jobs.
5. The monies deposited into such tax-deferred savings accounts during any taxable year may not exceed five thousand dollars.
6. On or before April first, two thousand twenty-two and annually thereafter, the department, in consultation with the department of taxation and finance, shall report on the number of small business taxpayers utilizing this program, the aggregate amount deposited for which a tax credit was claimed, the average aggregate amount on deposit in small business savings accounts, the amount of qualifying and non-qualifying withdrawals, and any other such data deemed necessary and appropriate by the department.
§ 2. Paragraph (a) of subdivision 9 of section 208 of the tax law is amended by adding a new subparagraph 21 to read as follows:
(21) any amount deposited into a small business tax-deferred savings account created pursuant to section one hundred thirty-eight-a of the economic development law, and any interest earned on such deposits, provided that any amount withdrawn for a non-qualifying purpose shall be included in the entire net income for the tax year in which the withdrawal was made.
§ 3. Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 43 to read as follows:
(43) any amount deposited into a small business tax-deferred savings account created pursuant to section one hundred thirty-eight-a of the economic development law, and any interest earned on such deposits, provided that any amount withdrawn for a non-qualifying purpose shall be included in the entire net income for the tax year in which the withdrawal was made.
§ 4. The department of taxation and finance, in consultation with the department of economic development, shall review and analyze all statistical data available for such purposes of determining the economic and revenue impact associated with this act. Such data shall be included in an annual report that shall also include, but not be limited to, the number of small business taxpayers utilizing this program, the average aggregate amount on deposit, the qualifying expenses claimed, any qualifying expenses deemed inappropriate and any other such data deemed necessary and appropriate by the department. Such annual report shall be posted on the websites of the department of taxation and finance and the department of economic development, and transmitted to the governor, the temporary president of the senate, the senate minority leader, the speaker of the assembly and the assembly minority leader.
§ 5. Rules and regulations. The department of taxation and finance in consultation with the department of economic development, is hereby authorized to promulgate rules and regulations in accordance with the
S. 2412--B 3
state administrative procedure act that are necessary to fulfill the purposes of this act. Such regulations shall include but not be limited to deadlines for establishing a small business tax deferred savings account, standard procedures and forms to be utilized in the program, and any other such regulations deemed necessary to promote the full utilization of this program. Such rules and regulations shall be completed within 180 days after the effective date of this act.
§ 6. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the economic development law and the tax law, in relation to authorizing the creation of small business tax-deferred savings accounts
Purpose or general idea of bill
This legislation would allow any small business to deposit profits into a small business tax-deferred savings account, up to $5,000 annually. This money may be withdrawn tax free for certain qualifying purposes.
Summary of specific provisions
Section 1 amends economic development law by adding a new section 138-a to create a small business tax-deferred savings account. Any small business may make a deposit into a small business tax-deferred account, any interest is tax free as long as used for a qualifying purpose. This section defines a qualifying purpose as expenditures on tangible personal property, or other tangible property including buildings, and structural components of buildings principally used in the ordinary course of the trade or business, and any other expenditures deemed appropriate by the department which will improve the competiveness and productivity of a small business and results in creation or retention of full-time jobs. Further requires an annual report on the number of small business taxpayers utilizing these programs, the aggregate amount deposited, average amount of deposit, and the amount of qualifying and non-qualifying withdrawals.
Section 2 amends paragraph (a) of subdivision 9 of section 208 of the tax law,to create the tax exemption associated with the small business savings account
Section 3 amends subsection (c ) of section 612 of the tax law by adding a new paragraph 43 to modify federally adjusted gross income by subtracting any withdrawal of the account
Section 4 authorizes the Department of Taxation and Finance along with the Department of Economic Development to report and monitor on this program.
Section 5 authorizes the Department of taxation with the Department of Economic Development to determine rules and regulations for the program
Section 6 authorizes this act effective immediately.
Justification
Permitting small businesses to create these tax-deferred accounts will enable, incentive and protect job creation. More importantly, these accounts will not only create and preserve jobs but will ensure that these jobs are full time positions. This legislation aims to assist small businesses in a way to afford them additional financial means to grow, preserve, and improve their business. The benefit that would be enacted should this bill become law sets a positive message that we
understand, support, and are willing to look at various alternatives aimed to help our small businesses.
Prior legislative history
A. 2457 of 2018, voted out of Assembly Committee .
Fiscal implications
To Be Determined
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.