April 14, 2022

New York Credits and Incentives Included in 2022-2023 Budget

By Barry Halpern, Partner, Tax & Business Services & Lisa Haime, Senior Manager, Tax & Business Services

New York Credits and Incentives Included in 2022-2023 Budget Tax Credits & Incentives

On April 11, 2022, Governor Kathy Hochul signed into legislation the more than $220 billion 2022-2023 fiscal year budget package. The budget includes the creation, extension and enhancement of various credits and incentives for businesses within targeted industries, hiring targeted employees, or experiencing growth, economic development and recovery. Some of these credits are temporary and administered on a “first come, first serve” basis until funding has been absorbed.

The following is a brief overview of some of these credits and incentives.

1. Creates a Tax Credit for Small Business COVID-19-related Expenses

  • Provides a refundable credit for small businesses ($2.5 million or less of gross receipts) that incurred expenses in 2021 and 2022 to comply with public health or other emergency orders to keep their businesses safe.
  • The credit is 50% of qualifying COVID-19 capital costs (capped at $25,000).
  • The program is capped at $250 million.

2. Extends the New York City Musical and Theatrical Production Tax Credit

  • Extends the expenditure cap of $3 million per production for productions that have their first performance prior to January 1, 2023 (and up to $1.5 million per production for productions with initial performance dates after January 1, 2023).
  • Extends the initial application deadline from December 31, 2022, to June 30, 2023.
  • Increases the total cap for this program from $100 million to $200 million.
  • Includes some additional technical corrections and clarifies how money contributed to the New York State Council on the Arts Cultural Programs Fund can be used.

3. Extends and Enhances the Hire-A-Vet Tax Credit

  • Extends the Hire-a-Vet tax credit through 2025, for veterans who begin employment before January 1, 2025.
  • Expands credit eligibility by adding Space Force veterans and veterans discharged prior to September 1, 2001.
  • Increases the credit from 10% to 15% of wages paid to non-disabled veterans (20% for disabled veterans).
  • Increases the credit maximum from $5,000 to $15,000 for full-time (1,820 hours over 12 months) non-disabled ($20,000 for disabled) veterans.
  • Establishes a credit of up to $7,500 for the employment of veterans non-disabled ($10,000 for disabled) working part-time (1,040 hours over 12 months).

4. Extends the New York Youth Jobs Program Tax Credit

  • Extends the credit program for employers in New York State that hire and employ at-risk youth on a full-time or part-time basis, through 2027.
  • Allocates $40 million in tax credits for the extended years in a similar manner to the expiring program:
    • $20 million for qualified employees residing in targeted areas, and
    • $20 million for qualified employees residing anywhere in New York.

5. Extends the Film Tax Credit

  • Extends the Film Tax Credit through 2029.
  • Requires productions to submit a diversity plan starting with tax year 2023.

6. Amended the Restaurant Return to Work Credit

  • Extends until May 1, 2022, the deadline to submit applications for the Restaurant Return-to-Work Credit.
  • Creates the “additional” Restaurant Return-to-Work Credit for eligible businesses approved for the program (see previous tax alert ) that have hired more than 10 employees.
    • Credit is $5,000 per net new job above 10 (up to 20 employees).
    • Applications must be submitted by July 1, 2022.
    • Advance cash option available if requested by September 30, 2022.

7. Establishes the Empire State Digital Gaming Media Production Credit

  • Credit against corporate franchise or personal income tax of 25% of qualified production cost.
  • Enhanced credit for production cost incurred and paid outside the Metropolitan district.
  • Application process and certain diverse workforce plan required.
  • Annual credit cap of $5 million.

8. Enhanced Tax Credits for Farmers

  • Increases the Investment Tax Credit percentage from 4% to 20% for property principally used in farming and agriculture.
  • Increases the Farm Workforce Retention Credit from $600 to $1,200 per eligible employee for designated tax years and extends eligible tax years by an additional year, to include 2021 through 2025.
  • Establishes the new Farm Employer Overtime Credit, allowing New York State farmers to claim a credit for overtime paid to eligible farm employees.

9. Other Noted Credits Created and Extended

  • Extends the Workers with Disabilities Tax Credit (WEDTC) through 2025.
  • Extends the Empire State Apprenticeship Tax Credit through 2027.
  • Extends the Clean Heating Fuel Tax Credit through 2025.
  • Extends the Tax Credit for Companies that Provide Transportation to Individuals with Disabilities through 2028.
  • Adds a credit for up to $15,000 for upgraded electric vehicles.
  • Extends the Alternative Fuels and Electric Vehicle Recharging Property Credit through 2025.
  • Establishes a tax credit for businesses outside NYC that convert their heating systems from Grade 6 fuel oil to either a biodiesel or geothermal heating system.
  • Establishes a tax credit for individual taxpayers who purchase and install geothermal energy systems for their residence.
  • Establishes a City Property Tax Abatement for the creation or expansion of childcare centers (enhanced credit for certain “childcare desert” areas).
  • Establishes a credit against New York City Taxes (UBT, GCT and BCT) for childcare providers.

The bill also clarifies that taxpayers that continued operations within New York, but whose workforces were remote during the COVID-19 emergency declaration period, can use pre-pandemic locations for the purposes of tax credit programs (e.g., Excelsior Program).

For additional information regarding credits and incentives within the New York State budget and their impact on your business, contact Barry Halpern at barry.halpern@marcumllp.com or your Marcum State and Local tax credits and incentives professional.