This is a great summary outline of tax and other provisions of the recently passed New York State Budget. This was developed by Laura Woodworth, CPA in our tax department.
The delay / deferral of business credits will have a significant impact on many taxpayers. It is unfortunate the NYS changed the rules in the middle of the game. Many investments in businesses were made with the cash flow from these credit in mind.
• Delay in $100 million in business tax credits
o The government imposed a three year delay on tax credits that have already been earned under 32 different programs
o Businesses with more than $2 million in aggregated business credits are required to defer the amounts above $2 million to 2013.
The deferred credits will be paid back to taxpayers over 2013-2015.
o Credits affected include:
Empire Zone Credits
Historic preservation benefits
Brownfield remediation credits
• Maximum biofuel production and QETC credits
o For members of an partnership or S corporation, the $2.5 million annual cap on the biofuel production credit will be applied at the entity level.
o The same rule would apply for the $250,000 annual cap on the Qualified Emerging Technology Company Facilities, Operations, & Training Credit.
o This means that the aggregate credit allowed to all the partners or shareholders in one of these entities would not be allowed to exceed the cap.
• Charitable Deductions
o The bill includes a limit on charitable deductions for taxpayers who earn more than $10 million per year.
Those taxpayers will have charitable contributions allowed cut in half; reducing allowable contributions from 50% to 25%.
• Hedge Fund Manager Commuter Tax
o The proposed tax on hedge fund managers who commute into the state was repealed.
This was in large part due to the governor of Connecticut offering relocation assistance to executives who moved to her state.
• Property Tax Cap
o Paterson proposed a cap on property taxes of 4%. This was not passed, but Paterson plans to reconvene lawmakers in October to revisit the issue.
o Fun Fact: Local taxes in New York are 78% above the national average.
• Medicaid Funding
o Lawmakers approved a plan to raise more than $1 billion if Congress fails to approve an increase in Medicaid financing this year.
o This will be done through across-the-board cuts to state programs.
• Other Notable Items
o $1.6 billion in STAR rebate checks won't be going out this year
o Increased taxes on tobacco
o Reinstatement of the 4% state tax on clothing under $110
o The 1 cent/oz tax on sugary drinks was dismissed by lawmakers
o Expanded hours on Quick Draw games and video slot machines at race tracks
o 5% cut in school aid (about $1.4 billion)
o Grocery stores are still not allowed to sell wine
o SUNY and CUNY schools are not allowed to set their own tuition rates
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