These provisions take effect immediately and apply to all tax years beginning on or after January 1, 2021. Article 24-A defines key terms, outlines how to make an annual PTE tax election, specifies applicable tax rates and PTE tax credits, and addresses estimated PTE tax payments, PTE tax return and payment requirements, and procedural provisions. New Article 24-A provides an elective tax on a pass-through entity (PTE), which permits partners, members and shareholders of electing partnerships and S Corporations to indirectly deduct state and local taxes (SALT) paid to mitigate the impact of the federal $10,000 cap on the deduction for state and local tax paid. The maximum business capital base tax due continues to be $5 million (a $350,000 cap applied to qualified New York manufacturers prior to the complete phase out for these taxpayers in 2021).Įlectable tax on pass-through entities (Part C of the Final Bill) The business capital base tax will completely phase out for all other Article 9-A taxpayers for tax years beginning on and after January 1, 2024. The tax rate for small businesses, as defined in NYS Tax Law Section 210.1(f), is 0% beginning on January 1, 2021. For tax years beginning on or after Januand before January 1, 2024, a 0.1875% rate applies.įor cooperative housing corporations and qualified New York manufacturers, the business capital base tax has completely phased out for tax years beginning on or after January 1, 2021. The business capital base tax for Article 9-A taxpayers, which was set to phase out fully in 2021, is extended for an additional three years, except for cooperative housing corporations, qualified New York manufacturers and small businesses as discussed below. Small-business taxpayers as defined under NYS Tax Law Section 210.1(f)Įxtension of business capital base tax (Part HHH of the Final Bill).Qualified emerging technology companies.Taxpayers with a business income tax base below $5 million.The increase applies to any taxpayer with a business income base of more than $5 million for the tax year. The business income tax rate for Article 9-A taxpayers (general corporations, financial institutions and S corporations) temporarily increases to 7.25% (from 6.5%), effective for tax years beginning on or after Januand before January 1, 2024. Increase in income tax rate for certain businesses (Part HHH of the Final Bill) The penalty for underpayment of estimated income tax will not apply to any installments due on or before September 15, 2021, if the underpayment results from the new income tax rates and the taxpayer makes the payments by September 15, 2021. This provision takes effect immediately and applies to tax years beginning on or after January 1, 2021. 10.90% for income over $25 million (for all filing statuses)įor tax years beginning on or after 2028, the top state personal income tax rate decreases to 8.82% for income over $2,155,350 (married filing joint) $1,616,450 (filing as head of household) and $1,077,550 (single/married filing separately).10.30% for income over $5 million to $25 million (for all filing statuses).9.65% for income over $2,155,350 (married filing joint) $1,616,450 (filing as head of household) and $1,077,550 (single/married filing separately) up to $5 million.These top tax rates, which are extended through 2027, are as follows: Personal income tax rates (Part A of the Final Bill)įor tax years beginning on or after January 1, 2021, the top state personal income tax rate increases from 8.82% to new rates ranging from 9.65% to 10.90%. This Alert summarizes changes included in the Final Bill, as well as excluded proposals. Establish an elective pass-through entity tax.Temporarily extend the business capital base tax.Temporarily increase the business income tax rate for certain businesses.Temporarily extend the top state personal income tax rate.The more significant provisions in the Final Bill do the following: The Final Bill includes various temporary tax increases and provisions affecting certain individuals, pass-through entities and corporations. On April 19, 2021, Governor Cuomo signed the New York State (NYS) Fiscal Year 2021-22 budget bill ( S.2509-C/ A.3009-C) (Final Bill). New York temporarily increases income tax rates on certain businesses and individuals, creates electable tax on pass-through entities, makes other tax changes
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