Senate Bill S5954

2019-2020 Legislative Session

Relates to the business income rate and expanding the small business subtraction modification

download bill text pdf

Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 03, 2020	reported and committed to finance
Feb 25, 2020	print number 5954a
Feb 25, 2020	amend and recommit to budget and revenue
Jan 08, 2020	referred to budget and revenue
May 16, 2019	referred to budget and revenue

Votes

- Mar 3, 2020 - Budget And Revenue Committee Vote
  S5954
  
  Aye
  
  7
  
  Nay
  
  0
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  
  0
  - - Budget And Revenue Committee Vote: Mar 3, 2020
      
      aye (7)
      
      Benjamin
      
      Borrello
      
      Felder
      
      Krueger
      
      Liu
      
      Martinez
      
      Tedisco

Bill Amendments

Original

A (Active)

co-Sponsors

2019-S5954 - Details

See Assembly Version of this Bill:: A6309
Current Committee:: Senate Finance
Law Section:: Tax Law
Laws Affected:: Amd §§210 & 612, Tax L
Versions Introduced in Other Legislative Sessions:: 2021-2022: S29, A5064
2023-2024: A2791
2025-2026: A3551

2019-S5954 - Summary

Relates to the business income rate and expanding the small business subtraction modification.

2019-S5954 - Sponsor Memo

                                
 
BILL NUMBER: S5954

SPONSOR: KAPLAN
 
TITLE OF BILL:  An act to amend the tax law, in relation to the busi-
ness income base rate and expanding the small business subtraction
modification

 
PURPOSE OF THE BILL:

Reduces the amount small businesses and farms that employ at least one
employee must pay in taxes by increasing the corporate tax threshold
from $290,000 to $390,000 and lowering the rate to 4%. In addition, it
would expand the small business exemption from 5% to 15% for net farm
and/or net business income under $250,000.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends article 9-A of the Tax Law to reduce the tax rate for
corporations that are considered small corporations from 6.5% to 4%.

Section 2 amends article 22 of the Tax Law to expand the business tax

exemption to partnerships, LLCs, and S-corporations that have at least
one employee. The exemption is increased from 5% to 15% for net farm
and/or net businesses income below $250,000.

Section 3 indicates the effective date of the legislation.

 
JUSTIFICATION:

More than 95% of businesses in New York are considered "small busi-
nesses" according to the Small Business Administration's generally
accepted definition. These small businesses employ half of New York's
private sector workforce and generate nearly $190 billion in payroll
receipts. Further, a healthy small business ecosystem supports local
economies and makes all of New York's communities and neighborhoods more
dynamic.

The fiscal year 2014 Enacted Budget included a personal income tax
exemption for small businesses and farms equaling 5% of net income for
businesses that have less than $250,000, have at least one employee, and
are structured as a sole proprietor, LLC, partnership or "S" corpo-
ration. Most small businesses are organized as one of these "pass
through" structures. This legislation expands this exemption from 5% to
15* for these small businesses. This legislation also provides a tax
rate cut for small businesses filing under the Corporate Franchise Tax.

Together, these provisions will provide real relief to true small busi-
nesses and family farms that drive the state's economy.

 
PRIOR LEGISLATIVE HISTORY:

New Bill.

 
FISCAL IMPLICATIONS:

Estimated annual tax savings of $300 million for small businesses.

 
EFFECTIVE DATE:
This act shall take effect immediately and apply to tax years beginning
on or after January 1,2020.

2019-S5954 - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5954
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 16, 2019
                                ___________
 
 Introduced  by  Sen.  KAPLAN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Budget and Revenue
 
 AN ACT to amend the tax law, in relation to  the  business  income  base
   rate and expanding the small business subtraction modification
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subparagraph (iv) of paragraph  (a)  of  subdivision  1  of
 section  210 of the tax law, as amended by section 12 of part A of chap-
 ter 59 of the laws of 2014, is amended to read as follows:
   (iv) (A) for taxable years beginning before January first,  two  thou-
 sand  sixteen,  if the business income base is not more than two hundred
 ninety thousand dollars the amount shall be six and one-half percent  of
 the  business  income base; if the business income base is more than two
 hundred ninety thousand dollars but not over three hundred ninety  thou-
 sand  dollars the amount shall be the sum of (1) eighteen thousand eight
 hundred fifty dollars, (2) seven and one-tenth percent of the excess  of
 the  business  income  base over two hundred ninety thousand dollars but
 not over three hundred ninety thousand dollars and (3) four and  thirty-
 five  hundredths  percent of the excess of the business income base over
 three hundred fifty thousand dollars but not over three  hundred  ninety
 thousand dollars;
   (B)  FOR  TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
 SAND TWENTY, IF THE BUSINESS INCOME BASE IS NOT MORE  THAN  TWO  HUNDRED
 NINETY THOUSAND DOLLARS THE AMOUNT SHALL BE FOUR PERCENT OF THE BUSINESS
 INCOME BASE; IF THE BUSINESS INCOME BASE IS MORE THAN TWO HUNDRED NINETY
 THOUSAND  DOLLARS BUT NOT OVER THREE HUNDRED NINETY THOUSAND DOLLARS THE
 AMOUNT SHALL BE THE SUM OF (1) ELEVEN THOUSAND SIX HUNDRED DOLLARS,  (2)
 SIX  AND ONE-HALF PERCENT OF THE EXCESS OF THE BUSINESS INCOME BASE OVER
 TWO HUNDRED NINETY THOUSAND DOLLARS BUT NOT OVER  THREE  HUNDRED  NINETY
 THOUSAND DOLLARS AND (3) EIGHTEEN AND THIRTEEN HUNDREDTHS PERCENT OF THE
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08516-01-9

 S. 5954                             2
 
 EXCESS  OF  THE  BUSINESS  INCOME BASE OVER THREE HUNDRED FIFTY THOUSAND
 DOLLARS BUT NOT OVER THREE HUNDRED NINETY THOUSAND DOLLARS;
   §  2. Paragraph 39 of subsection (c) of section 612 of the tax law, as
 added by section 1 of part Y of chapter 59  of  the  laws  of  2013,  is
 amended to read as follows:
   (39)  (A)  In  the  case  of  a  taxpayer who is a small business OR A
 TAXPAYER WHO IS A MEMBER, PARTNER, OR SHAREHOLDER OF A LIMITED LIABILITY
 COMPANY, PARTNERSHIP, OR NEW YORK S CORPORATION, RESPECTIVELY, THAT IS A
 SMALL BUSINESS, who OR WHICH has business income and/or farm  income  as
 defined  in  the  laws  of the United States, an amount equal to [three]
 FIFTEEN percent of the net items of income,  gain,  loss  and  deduction
 attributable  to  such  business  or farm entering into federal adjusted
 gross income, but not less than zero[, for taxable years beginning after
 two thousand thirteen, an  amount  equal  to  three  and  three-quarters
 percent  of  the net items of income, gain, loss and deduction attribut-
 able to such business or  farm  entering  into  federal  adjusted  gross
 income,  but  not  less than zero, for taxable years beginning after two
 thousand fourteen, and an amount equal to five percent of the net  items
 of  income,  gain,  loss  and deduction attributable to such business or
 farm entering into federal adjusted gross  income,  but  not  less  than
 zero, for taxable years beginning after two thousand fifteen].
   (B)  (I)  For  the purposes of this paragraph, the term small business
 shall mean: (I) a sole proprietor [or a farm business] who  employs  one
 or  more persons during the taxable year and who has net business income
 or net farm income of less than two hundred fifty thousand  dollars,  OR
 (II)  A LIMITED LIABILITY COMPANY, PARTNERSHIP OR NEW YORK S CORPORATION
 THAT DURING THE TAXABLE YEAR EMPLOYS ONE OR MORE  PERSONS  AND  HAS  NEW
 YORK  GROSS  BUSINESS INCOME ATTRIBUTABLE TO A NON-FARM BUSINESS THAT IS
 GREATER THAN ZERO BUT  LESS  THAN  ONE  MILLION  FIVE  HUNDRED  THOUSAND
 DOLLARS  OR  NET  FARM  INCOME  ATTRIBUTABLE  TO A FARM BUSINESS THAT IS
 GREATER THAN ZERO BUT LESS THAN TWO HUNDRED FIFTY THOUSAND DOLLARS.
   (II) FOR PURPOSES OF THIS PARAGRAPH, THE TERM NEW YORK GROSS  BUSINESS
 INCOME  SHALL  MEAN: (I) IN THE CASE OF A LIMITED LIABILITY COMPANY OR A
 PARTNERSHIP NEW YORK SOURCE GROSS INCOME AS DEFINED IN SUBPARAGRAPH  (B)
 OF  PARAGRAPH THREE OF SUBSECTION (C) OF SECTION SIX HUNDRED FIFTY-EIGHT
 OF THIS ARTICLE, AND, (II) IN THE CASE OF A NEW YORK S CORPORATION,  NEW
 YORK  RECEIPTS  INCLUDED  IN  THE  NUMERATOR OF THE APPORTIONMENT FACTOR
 DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS CHAPTER FOR THE TAXA-
 BLE YEAR.
   (C) TO QUALIFY FOR THIS MODIFICATION IN RELATION TO A  NON-FARM  SMALL
 BUSINESS  THAT IS A LIMITED LIABILITY COMPANY, PARTNERSHIP OR NEW YORK S
 CORPORATION, THE TAXPAYER'S INCOME  ATTRIBUTABLE  TO  THE  NET  BUSINESS
 INCOME FROM ITS OWNERSHIP INTERESTS IN NON-FARM LIMITED LIABILITY COMPA-
 NIES,  PARTNERSHIPS  OR  NEW  YORK  S CORPORATIONS MUST BE LESS THAN TWO
 HUNDRED FIFTY THOUSAND DOLLARS.
   § 3. This act shall take effect immediately and shall apply to taxable
 years beginning on or after January 1, 2020.

co-Sponsors

View additional co-sponsors

2019-S5954A (ACTIVE) - Details

See Assembly Version of this Bill:: A6309
Current Committee:: Senate Finance
Law Section:: Tax Law
Laws Affected:: Amd §§210 & 612, Tax L
Versions Introduced in Other Legislative Sessions:: 2021-2022: S29, A5064
2023-2024: A2791
2025-2026: A3551

2019-S5954A (ACTIVE) - Summary

Relates to the business income rate and expanding the small business subtraction modification.

2019-S5954A (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5954A

SPONSOR: KAPLAN
 
TITLE OF BILL:

An act to amend the tax law, in relation to the business income base
rate and expanding the small business subtraction modification

 
PURPOSE OF THE BILL:

Reduces the amount small businesses and farms that employ at least one
employee must pay in taxes by increasing the corporate tax threshold
from $290,000 to $390,000 and lowering the rate to 4%. In addition, it
would expand the small business exemption from 5% to 15% for net farm
and/or net business income under $250,000.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends article 9-A of the Tax Law to reduce the tax rate for
corporations that are considered small corporations from 6.5% to 4%.

Section 2 amends article 22 of the Tax Law to expand the business tax
exemption to partnerships, LLCs, and S-corporations that have at least
one employee. The exemption is increased from 5% to 15% for net farm
and/or net businesses income below $250,000.

Section 3 indicates the effective date of the legislation.

 
JUSTIFICATION:

More than 95% of businesses in New York are considered "small busi-
nesses" according to the Small Business Administration's generally
accepted definition. These small businesses employ half of New York's
private sector workforce and generate nearly $190 billion in payroll
receipts. Further, a healthy small business ecosystem supports local
economies and makes all of New York's communities and neighborhoods more
dynamic.

The fiscal year 2014 Enacted Budget included a personal income tax
exemption for small businesses and farms equaling 5% of net income for
businesses that have less than $250,000, have at least one employee, and
are structured as a sole proprietor, LLC, partnership or "S" corpo-
ration. Most small businesses are organized as one of these "pass
through" structures. This legislation expands this exemption from 5% to
15* for these small businesses. This legislation also provides a tax
rate cut for small businesses filing under the Corporate Franchise Tax.

Together, these provisions will provide real relief to true small busi-
nesses and family farms that drive the state's economy.

 
PRIOR LEGISLATIVE HISTORY:

New Bill.

 
FISCAL IMPLICATIONS:

Estimated annual tax savings of $300 million for small businesses.

 
EFFECTIVE DATE:
This act shall take effect immediately and apply to tax years beginning
on or after January 1,2020.

2019-S5954A (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5954--A
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 16, 2019
                                ___________
 
 Introduced  by  Sens. KAPLAN, BRESLIN, SKOUFIS -- read twice and ordered
   printed, and when printed to be committed to the Committee  on  Budget
   and  Revenue  -- recommitted to the Committee on Budget and Revenue in
   accordance with Senate Rule 6, sec. 8 --  committee  discharged,  bill
   amended,  ordered reprinted as amended and recommitted to said commit-
   tee
 
 AN ACT to amend the tax law, in relation to  the  business  income  base
   rate and expanding the small business subtraction modification
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subparagraph (iv) of paragraph  (a)  of  subdivision  1  of
 section  210 of the tax law, as amended by section 12 of part A of chap-
 ter 59 of the laws of 2014, is amended to read as follows:
   (iv) (A) for taxable years beginning before January first,  two  thou-
 sand  sixteen,  if the business income base is not more than two hundred
 ninety thousand dollars the amount shall be six and one-half percent  of
 the  business  income base; if the business income base is more than two
 hundred ninety thousand dollars but not over three hundred ninety  thou-
 sand  dollars the amount shall be the sum of (1) eighteen thousand eight
 hundred fifty dollars, (2) seven and one-tenth percent of the excess  of
 the  business  income  base over two hundred ninety thousand dollars but
 not over three hundred ninety thousand dollars and (3) four and  thirty-
 five  hundredths  percent of the excess of the business income base over
 three hundred fifty thousand dollars but not over three  hundred  ninety
 thousand dollars;
   (B)  FOR  TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
 SAND TWENTY-ONE, IF THE BUSINESS  INCOME  BASE  IS  NOT  MORE  THAN  TWO
 HUNDRED  NINETY THOUSAND DOLLARS THE AMOUNT SHALL BE FOUR PERCENT OF THE
 BUSINESS INCOME BASE; IF THE BUSINESS  INCOME  BASE  IS  MORE  THAN  TWO
 HUNDRED  NINETY THOUSAND DOLLARS BUT NOT OVER THREE HUNDRED NINETY THOU-
 SAND DOLLARS THE AMOUNT SHALL BE THE SUM  OF  (1)  ELEVEN  THOUSAND  SIX
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD08516-02-0

 S. 5954--A                          2
 
 HUNDRED DOLLARS, (2) SIX AND ONE-HALF PERCENT OF THE EXCESS OF THE BUSI-
 NESS  INCOME  BASE OVER TWO HUNDRED NINETY THOUSAND DOLLARS BUT NOT OVER
 THREE HUNDRED NINETY THOUSAND DOLLARS  AND  (3)  EIGHTEEN  AND  THIRTEEN
 HUNDREDTHS  PERCENT OF THE EXCESS OF THE BUSINESS INCOME BASE OVER THREE
 HUNDRED FIFTY THOUSAND DOLLARS BUT NOT OVER THREE HUNDRED  NINETY  THOU-
 SAND DOLLARS;
   §  2. Paragraph 39 of subsection (c) of section 612 of the tax law, as
 added by section 1 of part Y of chapter 59  of  the  laws  of  2013,  is
 amended to read as follows:
   (39)  (A)  In  the  case  of  a  taxpayer who is a small business OR A
 TAXPAYER WHO IS A MEMBER, PARTNER, OR SHAREHOLDER OF A LIMITED LIABILITY
 COMPANY, PARTNERSHIP, OR NEW YORK S CORPORATION, RESPECTIVELY, THAT IS A
 SMALL BUSINESS, who OR WHICH has business income and/or farm  income  as
 defined  in  the  laws  of the United States, an amount equal to [three]
 FIFTEEN percent of the net items of income,  gain,  loss  and  deduction
 attributable  to  such  business  or farm entering into federal adjusted
 gross income, but not less than zero[, for taxable years beginning after
 two thousand thirteen, an  amount  equal  to  three  and  three-quarters
 percent  of  the net items of income, gain, loss and deduction attribut-
 able to such business or  farm  entering  into  federal  adjusted  gross
 income,  but  not  less than zero, for taxable years beginning after two
 thousand fourteen, and an amount equal to five percent of the net  items
 of  income,  gain,  loss  and deduction attributable to such business or
 farm entering into federal adjusted gross  income,  but  not  less  than
 zero, for taxable years beginning after two thousand fifteen].
   (B)  (I)  For  the purposes of this paragraph, the term small business
 shall mean: (I) a sole proprietor [or a farm business] who  employs  one
 or  more persons during the taxable year and who has net business income
 or net farm income of less than two hundred fifty thousand  dollars,  OR
 (II)  A LIMITED LIABILITY COMPANY, PARTNERSHIP OR NEW YORK S CORPORATION
 THAT DURING THE TAXABLE YEAR EMPLOYS ONE OR MORE  PERSONS  AND  HAS  NEW
 YORK  GROSS  BUSINESS INCOME ATTRIBUTABLE TO A NON-FARM BUSINESS THAT IS
 GREATER THAN ZERO BUT  LESS  THAN  ONE  MILLION  FIVE  HUNDRED  THOUSAND
 DOLLARS  OR  NET  FARM  INCOME  ATTRIBUTABLE  TO A FARM BUSINESS THAT IS
 GREATER THAN ZERO BUT LESS THAN TWO HUNDRED FIFTY THOUSAND DOLLARS.
   (II) FOR PURPOSES OF THIS PARAGRAPH, THE TERM NEW YORK GROSS  BUSINESS
 INCOME  SHALL  MEAN: (I) IN THE CASE OF A LIMITED LIABILITY COMPANY OR A
 PARTNERSHIP NEW YORK SOURCE GROSS INCOME AS DEFINED IN SUBPARAGRAPH  (B)
 OF  PARAGRAPH THREE OF SUBSECTION (C) OF SECTION SIX HUNDRED FIFTY-EIGHT
 OF THIS ARTICLE, AND, (II) IN THE CASE OF A NEW YORK S CORPORATION,  NEW
 YORK  RECEIPTS  INCLUDED  IN  THE  NUMERATOR OF THE APPORTIONMENT FACTOR
 DETERMINED UNDER SECTION TWO HUNDRED TEN-A OF THIS CHAPTER FOR THE TAXA-
 BLE YEAR.
   (C) TO QUALIFY FOR THIS MODIFICATION IN RELATION TO A  NON-FARM  SMALL
 BUSINESS  THAT IS A LIMITED LIABILITY COMPANY, PARTNERSHIP OR NEW YORK S
 CORPORATION, THE TAXPAYER'S INCOME  ATTRIBUTABLE  TO  THE  NET  BUSINESS
 INCOME FROM ITS OWNERSHIP INTERESTS IN NON-FARM LIMITED LIABILITY COMPA-
 NIES,  PARTNERSHIPS  OR  NEW  YORK  S CORPORATIONS MUST BE LESS THAN TWO
 HUNDRED FIFTY THOUSAND DOLLARS.
   § 3. This act shall take effect immediately and shall apply to taxable
 years beginning on or after January 1, 2021.

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Senate Bill S5954

Sponsored By

Archive: Last Bill Status - In Senate Committee Finance Committee

Actions

Votes

Mar 3, 2020 - Budget And Revenue Committee Vote

Budget And Revenue Committee Vote: Mar 3, 2020

Bill Amendments

co-Sponsors

2019-S5954 - Details

2019-S5954 - Summary

2019-S5954 - Sponsor Memo

2019-S5954 - Bill Text download pdf

co-Sponsors

2019-S5954A (ACTIVE) - Details

2019-S5954A (ACTIVE) - Summary

2019-S5954A (ACTIVE) - Sponsor Memo

2019-S5954A (ACTIVE) - Bill Text download pdf

Comments

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Senate Bill S5954

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Sponsored By

Archive: Last Bill Status - In Senate Committee Finance Committee

Actions

Votes

Bill Amendments

co-Sponsors

2019-S5954 - Details

2019-S5954 - Summary

2019-S5954 - Sponsor Memo

2019-S5954 - Bill Text download pdf

co-Sponsors

2019-S5954A (ACTIVE) - Details

2019-S5954A (ACTIVE) - Summary

2019-S5954A (ACTIVE) - Sponsor Memo

2019-S5954A (ACTIVE) - Bill Text download pdf

Comments