State Tax Incentives
This new legislation gives Empire Zones more power to attract new businesses’ to the
State of New York. The methodology for calculation of the benefits is very favorable for new
businesses, and this provides an excellent tool to use with both start-up businesses and those
looking to expand or relocate.
More information and tax
forms
Wage Tax Credit
-
The Wage Tax Credit is based on the number of "new" full time
employees. "New" employees are those hired after a
business received Empire Zone Certification. This credit is generally $1,500
per employee per year for 5 years.
However, "targeted
employees" (JTPA participants, recipients of public assistance, honorably
discharged members of the armed services, etc.) paid at
least 135% of minimum wage would qualify for a wage tax credit of $3,000.
Furthermore, any "new" employee earning
$40,000 per year or more would qualify the for an additional $500 worth of wage
tax credits. In most cases, the total benefit would be $2,000 per new
employee per year or $3,500 in the case of a new "targeted employee."
The credit is used to reduce a business' NYS
business income taxes. New businesses that do not owe NYS taxes can receive
a cash refund of up to 50% of the credits
and the remainder is carried over until utilized.
Sales Tax Refunds
- Sales tax paid on the purchase of any building materials used in
construction or renovation of a property located within the Empire Zone can
be refunded to the company.
Sales Tax Exemption
- The sales tax exemption applies to most purchases made
by a Empire Zone certified business (unlike the refund, above, that only
applies to construction material).
The
exemption covers the majority of purchases for a ten year
period, but only exempts the purchaser from the State portion of the
sales tax.
Tax Reduction Credit
- The QEZE Tax Reduction Credit allows for a credit against
New York State Income Tax. The Tax Reduction Credit is available to certified
businesses for 10 years and is the product of multiple factors.
The most important factor is the "employment increase factor",
which is the "new" employment in the zone (those jobs created
after a business is certified) divided by the total employment of the
business in the zone. For example, if a business is certified in 2005
with 10 employees, than hired 10 new employees in 2006, its employment
increase factor is 10 new / 20 total employees or 50%. That means that
the business could reduce its NYS income tax burden by 50%. For a new
business with zero employment at certification, the credit could reduce the
state income tax burden to zero.
Investment
Tax Credit
- The ITC is a10% Corporate Tax
Credit based on investments made within the Empire Zone for manufacturing
equipment (8% credit for Personal income tax). Additional
3% investment tax credit is available for each of the three years following
the year in which the credit is taken (corporation only). Taxpayer must employ at least 101% of
the average number of people that were employed the year before the
investment tax credit was taken.
The total effect of these credits is a 19% return
to the company on its original investment (10% up front, 3% in each of the
following three years).
Zone Capital Tax Credits
- Economic Development Zone Capital Credits can be issued
by the Watertown Empire Zone for qualified new investments or contributions to an
approved project in the zone. They can be used by a business to attract
new capital investment into a business or by a non-profit to increase the tax
incentive donors have access to for their contributions.
