After only a few weeks of discussion, Governor Cuomo’s Tax-Free NY initiative has been enacted as START-UP NY (SUNY Tax-free Areas to Revitalize and Transform Upstate NY). The purpose of START-UP NY is to attract high-tech startups to university communities, particularly those in upstate New York, through targeted tax incentives. A key premise of START-UP NY is that businesses must be new to the state and must operate in specified university communities. The hope is to attract businesses, which would have started elsewhere, to initiate operations in New York and help turn around struggling economies. What makes this program is unique is the depth of the tax incentives offered by New York state.
Companies that qualify and participate in START-UP NY will not pay state business/corporate taxes, sales taxes, and property taxes for 10 years. The sales and property tax exemptions are valuable for nascent businesses because those are typically the most significant tax burdens. Additionally, employees of qualifying and participating business will pay no New York state income tax for the first five years of the operation of the business. For years six through ten, the New York state income tax exemption applies to the first $200,000 of wages for individuals, $250,000 for a heads of households, and $300,000 for joint filers. Finally, conveyances of real property located in qualifying areas will not be subject to local real estate transfer tax or local real property transfer tax imposed by a county or municipality.
Businesses that have not incorporated or initiated operations in New York should consider applying to participate in START-UP NY. Our next blog post will explain which business can participate in START-UP NY and how to navigate the application process.
The views expressed in this article are those of the authors and do not necessarily reflect the position or policy of Berkeley Research Group, LLC.
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