Tax Alert: New York State Legislative Changes: Tax Rates for New York Manufacturers
2/22/2012
On December 9, 2011, New York State enacted legislation adopting a reduced general corporation tax rate of 3.25 percent for “eligible qualified New York manufacturers.” The tax rate represents a 50 percent reduction from the current rate of 6.5 percent for qualified New York manufacturers, and is only in effect for the 2012, 2013, and 2014 tax years, after which it is scheduled to sunset.
For taxable years beginning on or after January 1, 2012, and before January 1, 2015:
- The franchise tax on business corporations will be calculated at a rate of 3.25 percent on the entire net income base for eligible qualified New York manufacturers;
- The tax rate on the minimum taxable income base for business corporations that are eligible qualified New York manufacturers has been reduced to 0.75 percent; and
- The amount of the fixed dollar minimum tax for eligible New York manufacturers will be one-half of the amounts set in the law for other business corporations.
Defining Manufacturer
The term “manufacturer” shall mean a taxpayer that, during the taxable year, is principally engaged in the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture, or commercial fishing. A “qualified New York manufacturer” has New York-based property with a Federal adjusted basis of at least one million dollars or has all of its real and personal property located in New York. This may also include qualified emerging technology companies.
The New York State Department of Taxation and Finance will establish guidelines for determining whether a taxpayer may be classified as an eligible qualified New York manufacturer. Criteria may include regional unemployment, the economic impact that manufacturing has on the surrounding community, population decline within the region, and median income within the region in which the manufacturer is located.
Action Required
Taxpayers should consider whether this new tax rate affects their financial statement presentation and/or 2012 estimated tax payments.
For more information on the new manufacturer tax rates for New York State or other state and local tax matters, please contact Corey L. Rosenthal, JD, director in the Firm’s State and Local Tax Practice, at crosenthal@jhcohn.com or 646-625-5729, or Patrick J. Duffany, CPA, JD, partner and director of the Firm’s State and Local Tax Practice, at pduffany@jhcohn.com or 860-368-3607.
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