Income/Franchise:
New York Budget Bill Includes Increased Corporate Tax Rates and Passthrough Entity-Level Tax
S2509C / A3009C, passed Assembly 4/7/21 and Senate 4/6/21. The New York FY 2021-2022 State Budget Bill, which Governor Cuomo is expected to sign, contains significant tax law changes – including the following provisions:
Article 9-A business corporation franchise tax rate on business income base increases from 6.5% to 7.25% for taxpayers with a business income base for the taxable year of more than $5 million, effective for taxable years beginning on or after January 1, 2021 and before January 1, 2024 (Part HHH);
Article 9-A business corporation franchise tax increased rate of 0.1875% on capital base applies to certain non-manufacturing taxpayers for taxable years beginning on or after January 1, 2021 and before January 1, 2024 (Part HHH);
Elective passthrough entity-level taxation effective for taxable years beginning January 1, 2021 (Part C);
New York State personal income tax rate increases effective as of January 1, 2021, for single filers reporting over $1.1 million and joint filers reporting over $2.2 million (from 8.82% to 9.65%), as well as additional income tax brackets and increased rates for those reporting over $5 million (10.3%) and over $25 million (10.9%), in income (Part A);
Decoupling some state and local taxes – including New York State and City personal income taxes, Article 9-A business corporation franchise tax, New York City business corporation tax (BCT) and New York City general corporation tax (GCT) – from a federal provision excluding/deferring gain due to investment in a qualified opportunity fund under Internal Revenue Code section 1400z-2(a)(1)(A) (Part DDD); and
Addresses the effect of the COVID-19 pandemic and remote workers on certain tax incentives that are based on maintaining presence within New York State or within specific areas of New York State (Part NN).
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