December 22, 2023

Seize the Opportunity: NYC’s Biotechnology Tax Credit Back in Action

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

Seize the Opportunity: NYC’s Biotechnology Tax Credit Back in Action Tax Credits & Incentives

The Big Apple has brought back a golden opportunity in the form of the Biotechnology Tax Credit, designed to fuel growth and innovation within the biotech sector. New York City recently signed legislation that reinstates a credit for Qualified Emerging Technology Companies (QETCs) located in New York City and focused on biotechnology. The refundable credit is available for tax years beginning on or after January 1, 2023, and before January 1, 2026. It may be claimed against the general corporation tax, business corporation tax, or unincorporated business tax.

Who’s Eligible?

A QETC is a company located in New York City that has total annual product sales of $10 million or less and meets either of the following criteria:

  • Its primary products or services are classified as emerging technologies or
  • It has research and development (R&D) activities in New York City, and its ratio of R&D funds to net sales equals or exceeds the average ratio for all surveyed companies classified (as determined by the National Science Foundation).

To claim the Biotechnology Credit, the taxpayer must also meet the following criteria:

  1. Employs no more than 100 full-time employees, with at least 75% based in NYC.
  2. Maintains an R&D-to-net sales ratio of at least 6%.
  3. Have gross revenues (including the gross revenues of affiliates and related members) of $20 million or less in the prior year.

How much is the credit worth?

Qualified companies are entitled to a refundable credit of up to $250,000 per year that covers the following:

  •  Purchase of Property: 18% of costs and fees related to the purchase of research and development property placed in service during the year.
  •  Research: 9% for qualified research expenses, primarily for in-house operating costs.
  •  Employee Training: Up to $4,000 per employee for certain employee training expenses.

The total available credit per year is $3 million. To maximize credit, existing companies should increase average full-time employees in NYC by 105%.

Act Now

Companies looking to take advantage of this credit must apply by January 15, following the calendar year they would like to claim it. If this date falls on a weekend or a holiday, the deadline extends to the next business day. Applications for 2023 must be filed by January 16, 2024. As the deadline is fast approaching, companies should consult their advisors as soon as possible.

For additional information regarding New York City credits and incentives opportunities and their impact on your business or other state business credits and incentives opportunities, contact Barry Halpern at [email protected], Lisa Haime at [email protected], or your Marcum State and Local Credits and Incentives professional.