New York State is now accepting applications for a $250 million tax-credit program designed to offset small-business expenses created by the pandemic.
The “initial intake” of the Empire State Development Corp.’s COVID-19 Capital Costs Tax Credit Program has begun. Through the competitive-application program, eligible small businesses can earn tax credits up to $25,000 – covering 50 percent of as much as $50,000 in qualifying costs.
Businesses must receive an ESD tax-credit certificate before Dec. 31, 2022, to apply it to their 2022 tax returns. Eligible COVID-related costs include, but are not limited to, disinfectants and cleaning supplies, new HVAC equipment, new contactless-sales equipment and expenses related to outdoor-space expansions.
To qualify, businesses must operate at least one location in New York State, have 100 or fewer employees total, have generated $2.5 million or less in gross receipts during the 2021 tax year and have incurred at least $2,000 in eligible costs between Jan. 1, 2021, and Dec. 31, 2022.
Credits will be awarded on a first-come, first-served basis “until program funds are deleted,” according to Gov. Kathy Hochul’s office.
“The pandemic has hit New York’s small businesses especially hard, forcing many to … incur significant financial burdens to protect their employees and customers from COVID-19,” the governor said in a statement. “Small businesses are the backbone of our state’s economy, and in order to truly recover from the COVID-19 crisis we must lend a helping hand.
“This tax credit will be a crucial lifeline to New York businesses.”
The COVID-19 Capital Costs Tax Credit Program shouldn’t be confused with the NYS COVID-19 Pandemic Small Business Recovery Grant Program, which provides flexible grant assistance to viable small businesses, micro-businesses and for-profit independent arts and cultural organizations hard-hit by the multiyear COVID downturn. The governor’s office specifically noted that costs already benefiting from the recovery grant program are ineligible for tax-credit benefits.
Despite that limitation, the launch of ESD’s new tax-credit effort – starting with the introduction of a new screening tool designed to help business owners determine eligibility – should come as a welcome relief to statewide entrepreneurs, according to Nassau County-based State Sen. Anna Kaplan (D-North Hills), chairwoman of the Senate Committee on Commerce, Economic Development and Small Business.
“Small businesses had to incur significant expenses to reopen safely during the pandemic, and … they need our support more than ever,” Kaplan said. “I was proud to sponsor the COVID-19 Capital Costs Tax Credit Program, which will help minimize the financial impacts incurred by small business owners to stay safe and stay open.”