Corporate Tax Reform
The 2014-15 New York State Budget enacted on March 31, 2014, contains the most significant reform of New York State’s corporate tax system since the 1940s. (Part A of Chapter 59 of the Laws of 2014). The changes are generally effective for tax years beginning on or after January 1, 2015. The new structure:
- modernizes and streamlines the tax code,
- creates clarity and certainty, and
- addresses the most common areas of dispute between taxpayers and the Tax Department.
The reform plan also includes tax cuts that bring the corporate tax rate to the lowest level since the late 1960s.
The 2015-16 and 2016-17 New York State Budgets contained technical and clarifying amendments to the corporate tax reform statute enacted in 2014. (Part T of Chapter 59 of the Laws of 2015 and Part P of Chapter 60 of the Laws of 2016). These technical and clarifying amendments are effective for tax years beginning on or after January 1, 2015.
Bank Tax and Corporate Franchise Tax have been merged
Prior to reform, New York taxed banks and other financial institutions under separate tax articles. This structure failed to accommodate dramatic changes in the financial services industry that allowed banks and other financial institutions to offer services that were essentially the same. As a result, taxpayers engaged in similar activities were subject to different tax rules. Separate articles also provided opportunities to exploit the differences between the two tax articles. Merging the Bank Tax with the Corporate Franchise Tax reflects the modern landscape of New York’s leading industry.
Easier to do business in New York State
The reforms also eliminate impediments to locating or expanding a business in New York State. These new rules recognize the shift to a service and knowledge-based economy by adopting a comprehensive market state tax sourcing approach. This will encourage companies to capitalize on New York’s highly educated and creative workforce and robust technology infrastructure without increasing their tax burden.
The Department of Taxation and Finance is currently in the process of updating its Business Corporation Franchise Tax Regulations to incorporate the changes made by the corporate tax reform legislation contained in the 2014-2015 and 2015-2016 enacted New York State Budgets. Prior to the State Administrative Procedure process to formally propose and adopt these regulations, the Department is seeking public comment on the draft rules. To review the draft rules and provide public comment, see Corporate tax reform draft regulations.
For more information on the changes included in the corporate tax reform legislation see:
- New York State Consolidated Laws
- Corporate Tax Reform FAQs
- TSB-M-15(2)C, Transitional Filing Provisions for Taxpayers Affected By Corporate Tax Reform Legislation
- TSB-M-15(4)C, (5)I, Investment Capital Identification Requirements for Article 9-A Taxpayers
- TSB-M-15(4.1)C, (5.1)I, Additional Investment Capital Identification Periods for Certain Non-Dealers for Specified Circumstances that Occur on or After October 1, 2015
- TSB-M-15(7)C, (6)I, Impact of New York State Corporate Tax Reform on New York S Corporations and their Nonresident and Part-Year Resident Shareholders
- TSB-M-15(8)C, (7)I, Direct and Indirect Attribution of Interest Deductions for Article 9-A Taxpayers
- TSB-M-16(3)C, Summary of Corporation Tax Changes Enacted in 2016 Budget Bill
- 2016 general business corporation tax forms
- Quick Guide to Completing Form CT-3, General Business Corporation Franchise Tax Return
The 2015-16 New York State Budget generally conformed the New York City tax law to the recently reformed New York State corporate franchise tax. For more information, see New York City Corporate Tax Reform.
How to ask a question about corporate tax reform
If you have a question about corporate tax reform, you may submit a question to our Corporate Tax Reform Working Group. The question will be reviewed and any answer provided will be published on our Corporate Tax Reform FAQs Web page.
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