What's happening
This bill allows small businesses in New York to create tax-deferred savings accounts for facility improvements or equipment purchases.
Why it matters
Encourages long-term investment by small businesses. By allowing tax-deferred savings specifically for facility upgrades and equipment purchases, this bill incentivizes small businesses to plan and save for capital improvements, which can boost productivity and competitiveness.
Creates clear guidelines and penalties. The bill specifies that withdrawals from these accounts must be used for qualifying expenses (facility or equipment improvements); otherwise, the withdrawn amount plus an extra 10% is added back to taxable income, discouraging misuse of the funds.
Aligns state tax treatment for both corporate and personal tax filers. The legislation amends both corporate and personal tax sections, ensuring that all types of small business structures can benefit equally from the tax deferral, regardless of whether they file as entities or pass-throughs.
Could improve access to capital for small businesses. By reducing the immediate tax burden on savings set aside for business improvements, the bill may help small businesses accumulate the funds needed to invest in growth without relying solely on loans or external financing.
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
Allow Small Business Savings Accounts
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to budget and revenue
- Referred to budget and revenue
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
695
2025-2026 Regular Sessions
IN SENATE (Prefiled)
January 8, 2025
Introduced by Sen. GALLIVAN -- read twice and ordered printed, and when printed to be committed to the Committee on Budget and Revenue
AN ACT to amend 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. Paragraph (a) of subdivision 9 of section 208 of the tax law is amended by adding a new subparagraph 24 to read as follows:
(24) any deposit made by a small business as defined in section one hundred thirty-one of the economic development law into a small business tax-deferred savings account maintained by a banking organization as defined in subdivision eleven of section two of the banking law and established for the purposes of improving the facilities of such business or for procurement of machinery or equipment or any interest earned on any small business tax-deferred savings account.
§ 2. Subdivision 9 of section 208 of the tax law is amended by adding a new paragraph (c-4) to read as follows:
(c-4) Entire net income shall include any withdrawal exclusive of interest income made by a small business as defined in section one hundred thirty-one of the economic development law from a small business tax-deferred savings account maintained by a banking organization as defined in subdivision eleven of section two of the banking law and established for the purposes of improving the facilities of such business or for procurement of machinery or equipment and an additional ten percent of any withdrawals exclusive of interest income from the small business tax-deferred savings account not used for improving the facilities of such business or for procurement of machinery or equipment.
§ 3. Subsection (b) of section 612 of the tax law is amended by adding a new paragraph 44 to read as follows:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02612-01-5
(44) Any withdrawal exclusive of interest income made by a small business as defined in section one hundred thirty-one of the economic development law from a small business tax-deferred savings account maintained by a banking organization as defined in subdivision eleven of section two of the banking law and established for the purposes of improving the facilities of such business or for procurement of machinery or equipment and an additional ten percent of any withdrawals exclusive of interest income from the small business tax-deferred savings account not used for improving the facilities of such business or for procurement of machinery or equipment.
§ 4. Subsection (c) of section 612 of the tax law is amended by adding a new paragraph 48 to read as follows:
(48) Any deposit made by a small business as defined in section one hundred thirty-one of the economic development law into a small business tax-deferred savings account maintained by a banking organization as defined in subdivision eleven of section two of the banking law and established for the purposes of improving the facilities of such business or for procurement of machinery or equipment or any interest earned on any small business tax-deferred savings account.
§ 5. This act shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2026.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to authorizing the creation of small business tax-deferred savings accounts
Purpose
This bill would establish a small business tax-deferred savings account that would enable funds to be designated for facility improvements or for procurement of machinery or equipment.
Summary of provisions
Sections 1 and 2 amend the Tax law governing Franchise Tax on Business Corporations by adding new provisions of law allowing for deposits into a small business tax-deferred savings account to be tax-exempt. With- drawals from such an account, for the identified purposes, would be considered taxable minus any interest which has accrued.
Section 3 and 4 amends the Tax law governing Personal Income Taxes by adding a new paragraph and subparagraph to allow for deposits into a small business tax-deferred savings account to be tax-exempt. With- drawals from such an account, for the identified purposes, would be considered taxable minus any interest which has accrued.
Section 5 sets forth the effective date.
Justification
Small businesses play a vital role in New York State's economy. By establishing a small business tax deferred savings account, these small businesses will be afforded an opportunity to reinvest into their oper- ations, thereby enhancing efficiency as well as sustaining and growing their workforce.
Legislative history
2023-24: S.236 Referred to Budget and Revenue
2021-22: S.1691/A.8225 Referred to Investigations and Government Operations/held for consideration in Ways and Means
2019-20: S.859 Referred to Investigations and Government Operations
2017-18: S.3391a Referred to Investigations and Government Operations
2015-16: S.7688 Referred to Investigations and Government Operations
Fiscal implications
None.
Effective date
This act shall take effect immediately and shall apply to taxable years beginning on or after January 1, 2024.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.