NY State Senate Bill 2021-S5441

Archive: Last Bill Status - In Senate Committee Budget And Revenue 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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to budget and revenue
Mar 05, 2021	referred to budget and revenue

co-Sponsors

2021-S5441 (ACTIVE) - Details

Current Committee:: Senate Budget And Revenue
Law Section:: Tax Law
Laws Affected:: Amd §§210 & 612, Tax L; amd §11-1712, NYC Ad Cd
Versions Introduced in Other Legislative Sessions:: 2015-2016: S7235
2017-2018: S2120
2019-2020: S943
2023-2024: S4236

2021-S5441 (ACTIVE) - Summary

Relates to business income base and certain small business taxpayers.

2021-S5441 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S5441

SPONSOR: O'MARA
 
TITLE OF BILL:

An act to amend the tax law and the administrative code of the city of
New York, in relation to business income base and certain small business
taxpayers

 
PURPOSE OR GENERAL IDEA OF BILL:

Reduces the amount small businesses and farms must pay in taxes by
increasing the corporate tax threshold from $390,000 to $500,000 and
lowering the rate to 2.5%. Expands the small business exemption to all
PIT businesses regardless of whether they have employees, increases the
threshold to $500,000, increases the exemption to 15%, and increases the
exemption to 20% for farmers.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1. amends the tax law to increase the threshold for which corpo-

rations are considered small corporations from $290,000 to $400,000
while reducing the tax rate for small corporations from 6.5% to 2.5%-.
The transition threshold from the small business rate to the full corpo-
rate rate will increase from $390,000 to $500,000. The phase down of
rates will occur over two years: to 4% in 2019 and to 2% in 2020 and
beyond.

Section 2. amends the tax law to expand the business tax exemption to
partnerships, LLCs, and S-corporations. The requirement that the busi-
ness have at least one employee is eliminated. The exemption is
increased from 5% to 10% for tax year 2022 and to 15% for tax years
beginning on or after 2023. The exemption for farm businesses is
increased from 5% to 20% for tax. years beginning on or after January 1,
2020. The threshold for eligibility is increased from $250,000 to
$500,000.

Section 3 makes corresponding changes to the New York City personal
income tax code.

 
JUSTIFICATION:

The FY 2014 Enacted Budget included a Senate sponsored Personal Income
Tax exemption for small businesses and small farms. The exemption is
equal to five percent of net income in 2018 and beyond. To qualify, the
business must be a sole proprietor or farm (regardless of how the busi-
ness is structured, sole proprietor, LLC, etc.), have less than $250,000
in net business income and employ at least one employee.  This bill
increases the exemption, expands on the taxpayers eligible for the
exemption, provides a rate cut for small businesses filing under the
Corporate Franchise Tax and will help New York's small businesses and
family farms remain an integral part of the State's economy for gener-
ations to come.

 
PRIOR LEGISLATIVE HISTORY:

2016: S7235

2018: S2120
2020: S943

 
FISCAL IMPLICATIONS:

SFY 2023: $302 million. When fully effective, the annual tax savings to
small businesses will be $464 million.

 
EFFECTIVE DATE:
This act shall take effect immediately and apply to tax years beginning
on or after January 1, 2023.

2021-S5441 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5441
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                               March 5, 2021
                                ___________
 
 Introduced  by  Sen.  O'MARA -- 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 and the administrative code of the  city  of
   New  York, in relation to business income base and certain small busi-
   ness taxpayers

   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-THREE,  IF  THE  BUSINESS INCOME BASE IS NOT MORE THAN FOUR
 HUNDRED THOUSAND DOLLARS THE AMOUNT SHALL BE FOUR PERCENT OF  THE  BUSI-
 NESS  INCOME BASE; IF THE BUSINESS INCOME BASE IS MORE THAN FOUR HUNDRED
 THOUSAND DOLLARS BUT NOT OVER FIVE HUNDRED THOUSAND DOLLARS  THE  AMOUNT
 SHALL  BE  THE SUM OF (1) SIXTEEN THOUSAND DOLLARS, (2) SIX AND ONE-HALF
 PERCENT OF THE EXCESS OF THE BUSINESS  INCOME  BASE  OVER  FOUR  HUNDRED
 THOUSAND  DOLLARS  BUT  NOT  OVER  FIVE HUNDRED THOUSAND DOLLARS AND (3)
 TWENTY PERCENT OF THE EXCESS OF  THE  BUSINESS  INCOME  BASE  OVER  FOUR
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD10106-01-1

 S. 5441                             2
 
 HUNDRED  FIFTY  THOUSAND  DOLLARS  BUT  NOT  OVER  FIVE HUNDRED THOUSAND
 DOLLARS;
   (C)  FOR  TAXABLE YEARS BEGINNING ON OR AFTER JANUARY FIRST, TWO THOU-
 SAND TWENTY-FOUR, IF THE BUSINESS INCOME BASE  IS  NOT  MORE  THAN  FOUR
 HUNDRED THOUSAND DOLLARS THE AMOUNT SHALL BE TWO AND ONE-HALF PERCENT OF
 THE  BUSINESS INCOME BASE; IF THE BUSINESS INCOME BASE IS MORE THAN FOUR
 HUNDRED THOUSAND DOLLARS BUT NOT OVER FIVE HUNDRED THOUSAND DOLLARS  THE
 AMOUNT  SHALL  BE  THE SUM OF (1) TEN THOUSAND DOLLARS, (2) SIX AND ONE-
 HALF PERCENT OF THE EXCESS OF THE BUSINESS INCOME BASE OVER FOUR HUNDRED
 THOUSAND DOLLARS BUT NOT OVER FIVE  HUNDRED  THOUSAND  DOLLARS  AND  (3)
 THIRTY-TWO  PERCENT  OF THE EXCESS OF THE BUSINESS INCOME BASE OVER FOUR
 HUNDRED FIFTY THOUSAND  DOLLARS  BUT  NOT  OVER  FIVE  HUNDRED  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]
 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 [thirteen] TWENTY-TWO, an amount equal to [three and three-
 quarters] TEN 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  begin-
 ning  after two thousand [fourteen] TWENTY-THREE, and an amount equal to
 [five] 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 begin-
 ning after two thousand fifteen].
   (B) IN THE CASE OF A TAXPAYER WHO IS A FARM 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 FARM
 BUSINESS, WHO OR WHICH HAS FARM INCOME AS DEFINED BY  THE  LAWS  OF  THE
 UNITED  STATES,  AN  AMOUNT  EQUAL TO TWENTY PERCENT OF THE NET ITEMS OF
 INCOME, GAIN, LOSS AND DEDUCTION ATTRIBUTABLE TO  SUCH  FARM.  THE  TERM
 FARM  BUSINESS  SHALL  MEAN  A FARM BUSINESS THAT HAS NET FARM INCOME OF
 LESS THAN FIVE HUNDRED THOUSAND DOLLARS.
   (C) (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] FIVE HUNDRED thou-
 sand dollars; OR (II) A LIMITED LIABILITY COMPANY,  PARTNERSHIP  OR  NEW
 YORK S CORPORATION THAT DURING THE TAXABLE YEAR HAS NEW YORK GROSS BUSI-
 NESS  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 FIVE HUNDRED THOUSAND DOLLARS. (II) FOR PURPOSES OF THIS PARA-
 GRAPH,  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

 S. 5441                             3
 
 IN  THE  NUMERATOR  OF THE APPORTIONMENT FACTOR DETERMINED UNDER SECTION
 TWO HUNDRED TEN-A OF THIS CHAPTER FOR THE TAXABLE YEAR.
   (D)  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  FIVE
 HUNDRED THOUSAND DOLLARS.
   §  3. Paragraph 35 of subdivision (c) of section 11-1712 of the admin-
 istrative code of the city of New York, as added by section 2 of part  Y
 of chapter 59 of the laws of 2013, is amended to read as follows:
   (35)  (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) IN THE CASE OF A TAXPAYER WHO IS A FARM 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 FARM
 BUSINESS, WHO OR WHICH HAS FARM INCOME AS DEFINED BY  THE  LAWS  OF  THE
 UNITED  STATES,  AN  AMOUNT  EQUAL TO TWENTY PERCENT OF THE NET ITEMS OF
 INCOME, GAIN, LOSS AND DEDUCTION ATTRIBUTABLE TO  SUCH  FARM.  THE  TERM
 FARM  BUSINESS  SHALL  MEAN  A FARM BUSINESS THAT HAS NET FARM INCOME OF
 LESS THAN FIVE HUNDRED THOUSAND DOLLARS.
   (C) (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] FIVE HUNDRED thou-
 sand dollars; OR (II) A LIMITED LIABILITY COMPANY,  PARTNERSHIP  OR  NEW
 YORK S CORPORATION THAT DURING THE TAXABLE YEAR HAS NEW YORK GROSS BUSI-
 NESS  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 FIVE HUNDRED THOUSAND DOLLARS. (II) FOR PURPOSES OF THIS PARA-
 GRAPH,  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 THE TAX  LAW,  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 THE TAX LAW FOR THE TAXABLE YEAR.
   (D) 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-

 S. 5441                             4
 
 NIES,  PARTNERSHIPS  OR  NEW  YORK S CORPORATIONS MUST BE LESS THAN FIVE
 HUNDRED THOUSAND DOLLARS.
   § 4. This act shall take effect immediately and shall apply to taxable
 years beginning on or after January 1, 2023.

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Senate Bill S5441

Sponsored By

Archive: Last Bill Status - In Senate Committee Budget And Revenue Committee

co-Sponsors

2021-S5441 (ACTIVE) - Details

2021-S5441 (ACTIVE) - Summary

2021-S5441 (ACTIVE) - Sponsor Memo

2021-S5441 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S5441

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Sponsored By

Thomas F. O'Mara

Archive: Last Bill Status - In Senate Committee Budget And Revenue Committee

co-Sponsors

Daphne Jordan

2021-S5441 (ACTIVE) - Details

2021-S5441 (ACTIVE) - Summary

2021-S5441 (ACTIVE) - Sponsor Memo

2021-S5441 (ACTIVE) - Bill Text download pdf

Comments