New York State Budget Approval Adds Two Additional Tax Credit Programs
Included as part of the recently signed 2021 New York state budget, the Excelsior Jobs Program has been expanded to allow for a higher amount of tax credits for companies working on green projects. The Excelsior Jobs Program, a New York state refundable tax credit program, encourages companies to relocate jobs to and expand current operations in the state of New York. Eligible businesses can claim credits over a benefit period of up to 10 years and must meet and maintain the job creation and investment thresholds set by the state. The program was recently extended, setting new credit caps through 2029 and also allowing the use of outstanding credits through 2039.
The green project program has been created and included in the Excelsior Jobs Program with the goal of encouraging companies to focus on green economic growth and job creation. Green projects have been defined as projects focusing on the making of products or the development of new technologies aimed at the reduction of greenhouse gas emissions and/or support the use of clean energy. Outlined in the 2021 New York state budget, green projects include, but are not limited to, manufacturing or developing products, technologies, or supply chain components primarily focused on renewable energy systems. Examples include vehicles that use non-hydrocarbon fuels and produce zero or near zero emissions, carbon capture and storage, clean energy storage, and products that significantly reduce greenhouse gas emissions.
The Green Projects Tax Credit will allow companies with eligible green projects to capture up to 7.5% of wages for each net new job created while non-green projects will be eligible for up to 6.85% of gross wages paid. The state has also created the Green Investment Tax Credit, a discretionary credit totaling up to 5% of qualifying new capital investments. Projects that are not considered to be “green” are still eligible for up to 2% of their qualified investment. Participants of these programs may claim tax benefits in the first taxable year that the enterprise receives a certificate of tax credit or the first taxable year listed on its preliminary schedule of benefits, whichever is later.
Participants of the Excelsior Research and Development Tax Credit are now eligible for up to 8% of the research and development expenditures attributable to activities performed within the state of New York if projects are considered green projects. Projects that are not green projects are eligible for no more than 6% of the qualified research and development expenditures for activities conducted in New York state.
With the enhancement of the Excelsior Tax Credit Program to include green projects, companies with projects that focus on environmental sustainability will be eligible for higher tax credits than projects that do not. These credits will predominantly be available to industries with significant potential for private-sector economic growth and development. In addition, these New York state incentives, in combination with other widely available federal incentives, can provide companies with New York operations significant tax planning opportunities to double-dip on eligible expenditures.