Tax Provisions of New York State’s 2016/2017 Budget Act

Returns of C corporations.

Effective for returns for taxable years beginning after December 31, 2015, New York State C corporation returns will be due on the 15th day of the fourth month following the close of their taxable year (April 15 for calendar year taxpayers). This is one month later than previously required. The estimated tax mandatory first installment, however, will continue to be due on the 15th day of the third month (March 15 for calendar-year taxpayers). Since many taxpayers will not be able to determine the estimated tax mandatory first installment by the 15th day of the third month, this first installment is to be computed as 25% of the tax in the second preceding taxable year, if the tax in the second prior year exceeded $1,000 but was equal to or less than $100,000; or 40% of the tax in the second preceding taxable year, if the tax in the second prior year exceeded $100,000 [2016 Budget Act, Part Q, section 10, amending Tax Law section 201-b(1)(a)].

In addition, while the tax return filing date for calendar-year New York City C Corporations in remains the 15th day of the third month following the close of the taxable year, the estimated tax mandatory first installment will continue to be due on the 15th day of the third month (March 15 for calendar-year taxpayers) on a new form CT-300. The estimated tax mandatory first installment is to be computed as 25% of the tax in the second preceding taxable year, if the tax in the second prior year exceeds $1,000 [2016 Budget Act, Part Q, section 22, amending NYC Admin Code section 11-658(1)].

The 2016 Budget Act also provides for a maximum automatic extension of six months for C corporations, other than those with fiscal years ending June 30, effective for returns for taxable years beginning after December 31, 2015.

Returns of New York State S corporations and partnerships.

The due date for New York State S corporations will continue to be the 15th day of the third month following the close of the taxable year. The mandatory first installment will also continue to be due on the 15th day of the third month following the close of the taxable year, and the manner of computing such installment will continue to be based on the tax shown on the return or on the extension request.

Effective for returns for taxable years beginning after December 31, 2015, partnership returns will be due on the 15th day of the third month following the close of their taxable year (March 15 for calendar-year taxpayers). This is one month earlier than previously required [2016 Budget Act, Part Q, section 12, amending Tax Law section 658(c)(1)].

The 2016 Budget Act provides for a maximum extension of six months for both partnerships and S corporations, an increase from the previous five-month extension for S corporations. This is effective for returns for taxable years beginning after December 31, 2015.

The Metropolitan Transportation Authority (MTA) surcharge.

Effective for returns for taxable years beginning after December 31, 2015, MTA Surcharge returns for calendar-year C corporations will be due on the 15th day of the fourth month following the close of their taxable year (April 15 for calendar-year taxpayers). This is one month later than previously required [2016 Budget Act, Part Q, section 10, amending Tax Law section 213-b(2)(a)]. Since the mandatory first quarter estimate for these returns is included on the corporate estimated tax form (CT-300), it will be due on the 15th day of the third month following the close of the taxable year. It is to be computed as 20% of the tax in the second preceding taxable year, if the franchise tax in the second prior year exceeded $1,000 but was equal to or less than $100,000; or 40% of the tax in the second preceding taxable year, if the franchise tax in the second prior year exceeded $100,000 [2016 Budget Act, Part Q, section 10, amending Tax Law section 213-b(a)].

C corporations with fiscal years ending June 30.

Effective for returns for taxable years beginning after December 31, 2025, returns for C corporations with fiscal years ending June 30 will be due on the 15th day of the fourth month following the close of their taxable year. This is one month later than previously required. The 2016 also Budget Act provides for a maximum extension of seven months until 2026 and a maximum extension of six months thereafter.

Form 1041 extensions.

The 2016 Budget Act provides for a maximum extension of 5½ months (previously six months) to file Form 1041, effective for taxable years beginning after December 31, 2015. Calendar-year fiduciary returns on extension will be due on September 30.

Middle-class tax cut.

Beginning with the 2018 tax year, the 2016 Budget Act provides that the personal income tax rates shall be adjusted by the cost-of living index and for a reduction in the personal income tax rates to be phased in during 2018 through 2024.

Effective for tax year 2018, the following taxpayers will be eligible for reduced tax rates. All tax brackets above and below those indicated below will remain the same but subject to indexing:

• Married taxpayers filing jointly with taxable income:
  • between $26,000 and $40,000; 5.90%,
  • between $40,000 and $150,000; 6.33%, and
  • between $150,000 and $300,000, 6.57%.

[2016 Budget Act, Part TT, section 1, repealing Tax Law section 601(a)(1)(B) and adding a new section 601(a)(1)(B)(ii)(I).]

• Single and married filing separately taxpayers with taxable income:
  • between $13,000 and $20,000, 5.90%;
  • between $20,000 and $75,000, 6.33%; and
  • between $75,000 and $150,000, 6.57%.

[2016 Budget Act, Part TT, section 1 repealing Tax Law section 601(c)(1)(B) and adding a new section 601(c)(1)(B)(ii)(I).]

• Head-of-household resident taxpayers with taxable income:
  • between $19,500 and $30,000; 5.90%,
  • between $30,000 and $100,000; 6.33%, and
  • between $100,000 and $250,000, 6.57%.

[2016 Budget Act, Part TT, section 1, repealing Tax Law section 601(b)(1)(B) and adding a new section 601(b) (1)(B)(ii)(I).]

In tax year 2024, after the full phase-in is complete, the following taxpayers will be eligible for a reduced tax rate:

• Married taxpayers filing jointly with taxable income:
  • between $26,000 and $150,000, 5.50%; and
  • between $150,000 and $300,000, 6.00%.

[2016 Budget Act, Part TT, section 1, repealing Tax Law section 601(a)(1)(B) and adding a new section 601(a) (1)(B)(ii)(VIII).]

• Single and married filing separately taxpayers with taxable income above:
  • between $13,000 and $75,000, 5.50%; and
  • between $75,000 and $150,000, 6.00%.

[2016 Budget Act, Part TT, section 1, repealing Tax Law section 601(c)(1)(B) and adding a new section 601(c) (1)(B)(ii)(VIII).]

• Head-of-household resident taxpayers with taxable income:
  • between $19,500 and $100,000, 5.50%; and
  • between $100,000 and $300,000, 6.00%.

[2016 Budget Act, Part TT, section 1, repealing Tax Law section 601(b)(1)(B) and adding a new section 601(b)(1) (B)(ii)(VIII).]

Transitioning the School Tax Relief (STAR) exemption into a personal income tax credit.

Effective for tax years beginning on or after January 1, 2016, taxpayers will have the option of receiving their STAR exemption savings either as a reduction of their real estate tax or as a personal income tax credit [2016 Budget Act, Part A, section 2, adding new Real Property Tax Law section 425(16); and Part A, section 6, adding new Tax Law section 606(eee)(1)(A)].

Clean heating fuel credit.

The clean heating fuel credit has been extended for three years and applies to purchases of biodiesel for space heating through January 1, 2020. To qualify for the credit, the 2016 Budget Act requires that, beginning January 1, 2017, bioheat fuel used for space heating must contain at least 6% biodiesel per gallon of bioheat [2016 Budget Act, Part N, amending Tax Law section 210-B(25)(a)].

Enhanced EITC for noncustodial parents.

The legislation makes permanent the enhanced earned income tax credit (EITC) for noncustodial parents that had previously been scheduled to expire after December 31, 2016 [2016 Budget Act, Part L, amending Chap. 58 of the Laws of 2006, Part I, section 2, as amended by Chap. 59 of the Laws of 2014, Part G, section 1].

Conversion of New York City School Tax Reduction Credit.

The New York City School Tax Reduction Credit is being converted from a refundable New York City credit to a refundable New York State credit available to residents of cities with a population of over 1,000,000 [2016 Budget Act, Part E, adding new Tax Law section 606(eee)(1)(A)]. The amount of the credit remains the same. Part-year residents must prorate the credit.

Tax treatment of charitable contributions for determining domicile.

Under this provision, charitable contributions, as defined in Internal Revenue Code (IRC) section 170(c) or State Finance Law section 179-q(7), will no longer be used to determine where individuals are domiciled at the time of their death [2016 Budget Act, Part Y, amending Tax Law section 951 by adding a new section 951(f)].

Tax shelter reporting.

The expiration date of tax shelter reporting provisions has been delayed from July 1, 2015, until July 1, 2019 [2016 Budget Act, Part M, amending Chap. 61 of the Laws of 2005, Part N, section 12 as amended by Chap. 61 of the Laws of 2011, Part B, section 1].

Hire-a-veteran credit.

The hire-a-veteran credit has been extended for two years, through taxable years beginning before January 1, 2019 [2016 Budget Act, Part I, amending Tax Law section 210-B(29)(a) & (b)].

Empire State commercial production credit.

The Empire State commercial production credit has been extended for two years, through taxable years beginning before January 1, 2019 [2016 Budget Act, Part J, amending Tax Law section 28(a)(1)].

Excelsior jobs program credit.

The cap on the amount of the Excelsior tax credit available statewide in the tax years 2016–2024 has been reduced as follows:

• Tax years 2016–2021, from $200,000,000 to $183,000,000;
• Tax year 2022, from $150,000,000 to $133,000,000;
• Tax year 2023, from $100,000,000 to $83,000,000; and
• Tax year 2024, from $50,000,000 to $36,000,000.

[2016 Budget Act, Part O, amending the Economic Development Law section 359.]

Credit for transporting disabled individuals.

This credit for companies that provide transportation to individuals with disabilities has been extended for six years, through 2022 [2016 Budget Act, Part K, amending Tax Law 21 section 210-B(38)(c)].

Beer production credit.

Effective for taxable years beginning on or after January 1, 2016, the beer production credit has been renamed the alcoholic beverage production credit, and the credit has been expanded to include cider, wine, and liquor [2016 Budget Act, Part V, amending Tax Law section 37(1)].

Real property tax credit for manufacturers.

The 2016 Budget Act amends the real property tax credit for manufacturers to include a taxpayer principally engaged in the production of goods by farming, agriculture, horticulture, flori-culture, viticulture, or commercial fishing. A taxpayer is eligible if he: 1) satisfies the required conditions required for the credit and 2) leases the real property from a related or unrelated party [2016 Budget Act, Part MM, section 1 amending Tax law section 210-B(43)(b)(2)].

Low-income housing credit.

The 2016 Budget Act increases the statewide aggregate dollar amount of the low-income housing credit as follows:

• Effective April 13, 2016, from $64,000,000 to $72,000,000;
• Effective April 1, 2017, from $72,000,000 to $80,000,000;
• Effective April 1, 2018, from $80,000,000 to $88,000,000;
• Effective April 1, 2019, from $88,000,000 to $96,000,000;
• Effective April 1, 2020, from $96,000,000 to $104,000,000.

[2016 Budget Act, Part H, section 1 amending the Public Housing Law section 22(4).]