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Summary of 2020 corporation tax and personal income tax changes

A summary of 2020 legislative changes is provided below.

Decoupling from certain federal provisions (Articles 9-A and 22)

Corporations subject to tax under Article 9-A of the Tax Law are subject to the 30% interest deduction limitation enacted under the Tax Cuts and Jobs Act and are not allowed to use the 50% limitation enacted in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) for tax years beginning in 2019 and 2020. Taxpayers must add back to their federal taxable income the increase in their federal interest deduction created pursuant to Internal Revenue Code (IRC) § 163(j)(10)(A)(i), if they have not made a valid federal election to opt out of the increased limit in the tax year.

For tax years beginning before January 1, 2022, any amendments made to the IRC after March 1, 2020, will not apply to personal income tax (Article 22). For more information, see New York State tax implications of federal COVID relief for tax years beginning before January 1, 2022.

Corresponding amendments have been made to the Administrative Code of the City of New York.

[Part WWW of Chapter 58 of the Laws of 2020; Tax Law §§ 208(9)(b)(26) and 607(a); Administrative Code of the City of New York §§ 11-1707(a), 11-506(b)(17), 11-602(8)(b)(21), and 11-652(8)(b)(22)]

Empire State film production and Empire State film post-production tax credits (Articles 9-A and 22)

Several amendments were made to the Empire State film production and the Empire State film post-production tax credits.

The funding for the credits was extended through 2025.

The definition of qualified film excludes a television series commonly known as variety entertainment, variety sketch and variety talk programs (other than relocated television productions). However, television series that have applied for a tax credit and have been deemed conditionally eligible by Empire State Development for a tax credit prior to April 1, 2020, will continue to be eligible provided the series remains in continuous production and the taxpayer continually applies for a tax credit for each season of the series.

The following amendments apply to applications filed with the New York State Governor’s Office of Motion Picture & Television Development on or after April 1, 2020:

  • The definition of qualified film excludes an episode of a television series. In addition, a qualified film, other than a television pilot, must have a minimum budget of $1 million if the majority of the principal photography shooting days for the qualified film are shot in the counties of Westchester, Rockland, Nassau, or Suffolk or the five New York City boroughs, or have a minimum budget of $250,000 if the majority of principal photography shooting days are shot in other counties of New York State.
  • The allowable amount of the Empire State film production credit has been reduced from 30% to 25%.
  • The allowable amount of the Empire State film post-production credit has been reduced from 30% to 25% for qualified films produced at qualified post-production facilities located within the Metropolitan Commuter Transportation District and from 35% to 30% for qualified films produced at qualified post-production facilities located elsewhere in New York State.

The credit amounts allowed are determined by the New York State Governor’s Office of Motion Picture & Television Development. For more information on these credits, visit www.esd.ny.gov.

[Part M of Chapter 59 of the Laws of 2020; Tax Law §§ 24, 31, 210-B(20), 210-B(32), 606(gg), and 606(qq)]

Excelsior jobs program tax credit (Articles 9-A, 22, and 33)

The excelsior jobs program tax credit (the program) has been extended through tax year 2039.

In addition, enhancements have been made to the program to add tax credits for green projects aimed at reducing greenhouse gas emissions and supporting the use of clean energy.

A green project is defined as a project deemed by the Commissioner of Economic Development to make products or develop technologies that are primarily aimed at reducing greenhouse gas emissions or supporting the use of clean energy.

A green project includes, but is not limited to, the manufacture or development of products or technologies or supply chain components primarily for renewable energy systems, vehicles that use non-hydrocarbon fuels and produce zero or near zero emissions, heat pumps, energy efficiency, clean energy storage and other products that significantly reduce greenhouse gas emissions by minimizing the utilization of depletable resources or by improving industrial efficiency.

A green project does not include a project primarily composed of necessarily local activities such as retail, building construction, or the installation, deployment or adoption of a clean energy product or development of technologies that would produce only marginal and incremental energy savings or environmental benefits ancillary to the core function of the product or technology.

To be eligible for the credit for green projects, a company must be engaged in a green project and must be operating predominately in New York State in one of the following industries:

  • manufacturing;
  • software development and new media;
  • scientific research and development; or
  • agriculture.

A participant in the program may be eligible to claim the:

  • excelsior jobs tax credit component for each net new job it creates in New York State. The existing jobs credit is 6.85% for traditional projects and 7.5% for green projects.
  • investment tax credit component on qualified investments. The investment tax credit is 2% of qualified costs for traditional projects and 5% for green projects.
  • research and development tax credit component for expenditures attributable to activities conducted in New York State. The research and development tax credit is 6% of expenditures for traditional projects and 8% for green projects.

The amount of each credit component allowed is determined by Empire State Development. For more information on this credit, visit their website at www.esd.ny.gov.

[Part L of Chapter 59 of the Laws of 2020; Tax Law §§ 31, 210-B(31), 606(qq), and 1511(y)]

Hire a veteran credit (Articles 9-A, 22, and 33)

The hire a veteran credit has been extended through tax year 2021.

The credit is available to employers for hiring and employing qualified veterans for at least one year and at least 35 hours a week. To be eligible, a qualified veteran must begin employment before January 1, 2021.

For more information on this credit, see:

[Part B of Chapter 59 of the Laws of 2020; Tax Law §§ 210-B(29), 606(a-2), and 1511(g-1)]

Long-term care insurance credit (Article 22)

For tax years beginning on or after January 1, 2020, the credit has been amended to allow a taxpayer (including nonresident and part-year resident taxpayers) to claim the credit only if the taxpayer’s New York adjusted gross income is less than $250,000. The amendment also provides that the credit amount cannot exceed $1,500.

In order to qualify for the credit, a taxpayer’s premium payment must be for the purchase of, or for continuing coverage under, a long-term care insurance policy that qualifies for the credit pursuant to Insurance Law § 1117.

[Part E of Chapter 59 of the Laws of 2020; Tax Law § 606(aa)]

New York call center jobs act (Articles 9-A, 22, and 33)

As of June 30, 2020, an employer intending to relocate a call center or 30% or more of their call center employees from New York to a foreign country must notify the New York State Department of Labor (DOL) at least 90 days prior to the move. The Commissioner of DOL will annually compile a list of call center employers that have relocated, post the list on DOL’s public website, and provide a copy of the list to the Commissioner of Taxation and Finance.

A call center employer that appears on the annual list will have several tax credits denied by the Commissioner of Taxation and Finance for the five tax years, excluding short tax years, immediately succeeding the tax year the call center employer appears on the annual list, provided the agreement for the tax credit was entered into after June 30, 2020.

The credits that will be denied are:

  • Recovery Tax Credit [210-B(53), 606(jjj), and 1511(dd)]
  • START-UP Tax Elimination Credit [210-B(41) and 606(ww)]
  • Minimum Wage Reimbursement Credit [210-B(40), 606(aaa), and 1511(cc)]
  • Empire State Jobs Retention Program Credit [210-B(37), 606(tt), and 1511(bb)]
  • Economic Transformation/Facility Redevelopment Program Credit [210-B(35), 606(ss), and 1511(aa)]
  • Excelsior Jobs Program Credit [210-B(31), 606(qq), and 1511(y)]
  • Employee Training Incentive Program Tax Credit [210-B(50) and 606(ddd)]
  • Empire State Apprentice Program Tax Credit [210-B(49) and 606(vvv)]; and
  • Employment Incentive Tax Credit [210-B(2) and 606(a-1)].

[Subpart R of Part XX of Chapter 55 of the Laws of 2020]

New York City resident tax rates (Article 30)

The New York City resident tax rates and the 14% additional tax have been extended and now apply to tax years beginning before 2024.

[Subpart G of Part XXX of Chapter 58 of the Laws of 2020; Tax Law §§ 1301, 1304, and 1304-B; Administrative Code of the City of New York §§ 11-1701 and 11-1704.1]

New York State campaign finance fund (Article 22)

For tax years beginning on or after January 1, 2020, the Tax Law has been amended to add a new voluntary contribution to enable full-year or part-year resident taxpayers to make donations to the New York State campaign finance fund on their personal income tax return. An individual resident taxpayer whose New York State income tax liability for the tax year is $40 or more may donate $40 to this fund. Married resident individual taxpayers filing a joint return whose New York State income tax liability for the tax year is $80 or more may donate $40 (one spouse contributing) or $80 (both spouses contributing) to this fund. Donations do not reduce the amount of State tax owed by the taxpayer.

For more information on this and other voluntary contributions, see Voluntary contributions.

[Part ZZZ of Chapter 58 of the Laws of 2020; Tax Law § 630-h; State Finance Law § 92-t]

Revocation of the election to participate in the Employer Compensation Expense Program (ECEP) (Article 24)

If an employer has determined it no longer wishes to participate in ECEP for a calendar year that it has already elected to participate, it may request to revoke the election for that calendar year provided it:

  • has not made any required Employer Compensation Expense Tax (ECET) payments (EC-1) to the Tax Department for that calendar year;
  • has not filed any required quarterly ECET returns (EC-100) for that calendar year; and
  • has submitted a request to revoke the election to participate in ECEP no later than January 15 of that calendar year.

For more information, see Revoking the Employer Compensation Expense Program (ECEP) employer election.

[Part X of Chapter 56 of the Laws of 2020; Tax Law § 851]

START-UP NY program applications (Articles 9-A and 22)

The START-UP NY program provides tax benefits to approved businesses that locate in vacant space or land of approved New York State public and private colleges and universities, approved strategic state assets, and New York State incubators affiliated with private universities or colleges that are designated as tax-free NY areas. The program is administered by Empire State Development (ESD).

The application deadline for businesses that want to participate in the START-UP NY program has been extended to December 31, 2025. For more information on this program, visit ESD’s website at www.esd.ny.gov and see TSB-M-13(7)C, (6)I, (11)M, (1)MCTMT, (7)S, SUNY Tax-Free Areas to Revitalize and Transform Upstate New York Program.

[Part KKK of Chapter 58 of the Laws of 2020; Economic Development Law § 436.1]

Tax Department authorized to provide unclaimed tax benefits (Article 22)

Effective April 3, 2020,

  • the Tax Department is authorized to compute and issue a New York State and New York City earned income credit when it discovers a taxpayer is eligible for such a credit and did not claim the credit on his or her personal income tax return; and
  • if an individual taxpayer has elected to claim a New York itemized deduction, but the Tax Department determines that the New York standard deduction is greater than the allowable itemized deduction, the Tax Department will recompute the taxpayer’s tax liability using the standard deduction. Taxpayers will be notified if an adjustment is made to their election.

[Part F of Chapter 59 of the Laws of 2020; Tax Law §§ 606(d)(6), 613, and 1310(f); Administrative Code of the City of New York § 11-1706(d)]

Television writers’ and directors’ fees and salaries credit (Articles 9-A and 22)

A clarification was made to the effective date of the television writers’ and directors’ fees and salaries credit, which was signed into law by Chapter 683 of the Laws of 2019.

The credit will now take effect on the taxable year or years after the Legislative Bill Drafting Commission is notified by the Department of Economic Development (ESD) in a report (based upon a study conducted by ESD) that there is statistically significant evidence of the underutilization of minority and women screenwriters on projects in New York State.

[Subpart X of Part XX of Chapter 55 of the Laws of 2020; Tax Law §§ 24-b, 606(v), and 210 B(54)]

Warrantless state tax debt collection methods (Articles 9, 9-A, 22, and 33)

The warrantless state tax debt collection methods under Tax Law §§ 174-c and 1701 have been extended through March 31, 2025.

Tax Law § 174-c allows the Commissioner of Taxation and Finance (Commissioner) to serve income executions (wage garnishments) on individual tax debtors and, if necessary, on employers of tax debtors, for collection of fixed and final tax debts without filing a public warrant.

Tax Law § 1701 allows the Commissioner to use the financial institution data match system for collection of fixed and final tax debt, regardless of whether a warrant has been filed.

[Part A of Chapter 59 of the Laws of 2020; Tax Law §§ 174-c and 1701]

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