NY State Senate Bill 2023-S4236

Current 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 03, 2024	referred to budget and revenue
Feb 06, 2023	referred to budget and revenue

co-Sponsors

2023-S4236 (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
2021-2022: S5441

2023-S4236 (ACTIVE) - Summary

Relates to business income base and certain small business taxpayers.

2023-S4236 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S4236

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.

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.

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:

2015: S7235

2017: S2120

2019: S943

2021: S5441
 
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, 2025.

2023-S4236 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4236
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             February 6, 2023
                                ___________
 
 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-FIVE,  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.
                                                            LBD08799-01-3

 S. 4236                             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-SIX, 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
 amended by section 1 of part C of chapter 59 of the  laws  of  2022,  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 fifteen
 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.
   (B) (i) For the purposes of this paragraph, the  term  small  business
 shall  mean:  (I)  a  sole  proprietor  [who employs one or more persons
 during the taxable year and] who has net business income  [or  net  farm
 income]  of  greater  than zero but less than [two] FIVE hundred [fifty]
 thousand dollars;
   (II) a limited liability company, partnership, or New  York  S  corpo-
 ration  that  during  the taxable year [employs one or more persons and]
 has net farm income attributable to a farm business that is greater than
 zero but less than [two] FIVE hundred [fifty] thousand dollars; or
   (III) a limited liability company, partnership, or New York  S  corpo-
 ration  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 thou-
 sand 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]
 FIVE hundred [fifty] thousand dollars.
   § 3. Paragraph 35 of subdivision (c) of section 11-1712 of the  admin-
 istrative  code of the city of New York, as amended by section 2 of part
 C of chapter 59 of the laws of 2022, is amended to read as follows:
 S. 4236                             3
 
   (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 fifteen
 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.
   (B) (i) For the purposes of this paragraph, the  term  small  business
 shall  mean:  (I)  a  sole  proprietor  [who employs one or more persons
 during the taxable year and] who has net business income  [or  net  farm
 income]  of  greater  than zero but less than [two] FIVE hundred [fifty]
 thousand dollars;
   (II) a limited liability company, partnership, or New  York  S  corpo-
 ration  that  during  the taxable year [employs one or more persons and]
 has net farm income that is greater than zero but less than  [two]  FIVE
 hundred [fifty] thousand dollars; or
   (III)  a  limited liability company, partnership, or New York S corpo-
 ration 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  thou-
 sand 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)
 or  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  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]
 FIVE hundred [fifty] thousand dollars.
   § 4. This act shall take effect immediately and shall apply to taxable
 years beginning on or after January 1, 2025.

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Senate Bill S4236

Sponsored By

Current Bill Status - In Senate Committee Budget And Revenue Committee

co-Sponsors

2023-S4236 (ACTIVE) - Details

2023-S4236 (ACTIVE) - Summary

2023-S4236 (ACTIVE) - Sponsor Memo

2023-S4236 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S4236

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Sponsored By

Thomas F. O'Mara

Current Bill Status - In Senate Committee Budget And Revenue Committee

co-Sponsors

George M. Borrello

Peter Oberacker

2023-S4236 (ACTIVE) - Details

2023-S4236 (ACTIVE) - Summary

2023-S4236 (ACTIVE) - Sponsor Memo

2023-S4236 (ACTIVE) - Bill Text download pdf

Comments