A legislature, be it city, state or federal, has many options at its disposal to improve the local economy. This can include a significant amount of modification to the tax laws, to allow more money to remain in the pockets of consumers to be spent. One of the more common methods used by several locales in recent years has been the propagation of tax incentives.
Definitions and Parameters of Tax Incentives
A tax incentive is defined as an exclusion or exemption from tax liability, usually offered as an inducement to engage in a certain activity – for example, investing in certain areas or funds. Tax incentives usually have conditions attached, and they can be withdrawn if the conditions are not fulfilled. Given the recent recession in the U.S., more and more cities and states (to say nothing of the federal government) have started using tax incentives to help lure investment to their area. New York State and New York City have both done so, in a variety of areas.
State Corporate Tax Incentives
New York has one of the lowest corporate income tax rates in the country, in addition to the multiple tax incentives still being offered by the state and city legislatures. Some of the better known are:
- For investors, job creators and R&D in Qualified Emerging Technology Companies;
- A ten-year tax abatement on real property;
- Sales tax exemptions for specific industrial purchases, mostly start-up materials and industrial items;
- Cash incentives in the form of low-interest loans and grants, for companies that commit to job creation and capital investment in New York State; and
- No personal property tax, regardless of whether the property is tangible or intangible.
Research & development is the business activity that is incentivized the most, and it stands to reason; companies putting down roots in a state often want to have all their processes on site. R&D is also an extremely lengthy process, and the longer the process is based in New York, in theory, more money comes into the state economy.
New York City Film Incentives
New York City also offers numerous tax incentives, but the two most common variants are in the area of housing and film production. The New York City Department of Housing Preservation & Development offers several incentives for multiple dwellings and also for rehabilitation of historic buildings. However, by far the most utilized incentives are for film production companies.
The New York Loves Film initiative sets out a detailed list of tax incentives available to production companies that shoot in New York City and State. Some of the more popular ones are:
- 30% (fully refundable) tax credit on expenses incurred during and post-production;
- 5% on qualified expenses incurred during and post-production on commercials, as well as a 20% annual growth credit; and
- Several sales tax exemptions specifically aimed at post-production for film and television.
Seek Out An Attorney for Help
Despite the availability of all these incentives, the procedure to apply for them can be complex and time-consuming. Sometimes a tax attorney may be able to streamline the process. Our attorneys have years of experience in making sense of the law for clients. Contact our New York City offices for a free initial consultation today.