Tax provisions in New York State’s new budget: Newly automatic credits, revised incentives, and more

• For tax years beginning on or after Jan. 1, 2020, the Long-Term Care Insurance credit amount is reduced to $1,500, and only taxpayers with a New York adjusted gross income (AGI) of less than $250,000 are eligible. 
• New York State will automatically determine the Earned Income Tax credit if it has all applicable information on file to calculate eligibility, and if a taxpayer is entitled to a refund, the refund will be issued (no interest will be paid).
• Where a taxpayer has elected to itemize deductions, New York State will be able to automatically use the standard deduction when the standard deduction is greater than the allowable itemized deductions. 
• New York City will automatically determine whether a taxpayer is eligible to receive the New York City Household Credit, and if the credit has not been claimed, the city will automatically compute the credit and refund the amount allowable (no interest will be paid).

• The Hire-A-Vet credit is now available through 2021 for a qualified veteran who commences employment prior to Jan. 1, 2021. 
• A new category is added to the Excelsior Jobs Program for defined “green projects.” The refundable credits provide a higher benefit for qualifying green projects: (1) Excelsior jobs credit is available up to 7.5% instead of 6.85% of gross wages paid per new job; (2) investment credit is equal to 5% instead of 2% of the cost or other basis for federal income tax purposes of the qualifying investment; and (3) research and development credit on qualifying expenditures attributable to activities conducted in New York is 8% instead of 6%.
• Film Production and Post-Production credits are reduced from 30% to 25% of qualifying production costs, and the availability of such credits is extended to 2025.  Various changes were also made to definitions relating to these credits.

• New York State updated the definition of the wholesale price for the Tobacco Products Tax as “the price for which a manufacturer or other person sells tobacco products to a distributor, including the federal excise taxes paid by the manufacturer or other person.”
• Tax on liquor containing not more than 2% alcohol by volume is reduced to zero from one cent per liter. 

Given these challenging and uncertain times due to the COVID-19 pandemic, it is critical to monitor on a daily basis state and local tax changes and the impact that the provisions in the budget have on individuals and businesses.

Arvinder Kaur, CPA, Senior Manager, State and Local Tax Services '

646.448.5466

Corey Rosenthal, JD, Principal, Practice Leader, State and Local Tax Services 

646.625.5729