Small businesses may qualify for NYS tax credits for COVID-safety costs

Small businesses may qualify for New York State tax credits to cover costs for COVID-19 safety.

Gov. Kathy Hochul said this week that the state has opened an “initial intake tool” for small businesses to determine if they qualify for the COVID-19 Capital Costs Tax Credit Program.

The link to the tool is available here.

This $250 million tax-credit program is designed to support small businesses that took on expenses to comply with emergency orders and regulations or to increase public safety in response to COVID-19.

Businesses that are deemed eligible via the screening tool will be given a link to the application when the program application opens.

“The pandemic has hit New York’s small businesses especially hard, forcing many to close and others to incur significant financial burdens to protect their employees and customers from COVID-19,” Hochul said in a statement.

Referring to the importance of small business to the state’s economy, Hochul said that “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 and I encourage all who are interested to apply for this much-needed aid.”

Small businesses were “burdened with many expenses during the pandemic that were necessary to keep their employees and customers safe,” Empire State Development President, CEO and Commissioner Hope Knight said in a statement. “This tax credit will ease the burden that the business community incurred during COVID and help it continue to get steadily back on its feet.”

Eligible COVID-19 related costs include supplies to disinfect or protect against transmission; expansion or space accommodations for social distancing; expenses related to increased outdoor activity and outdoor space expansions; machinery and equipment to facilitate contactless sales.

Tax credits will cover 50 percent of eligible costs, up to $50,000, for a maximum tax credit award of $25,000, and credits will be awarded on a first come first serve basis until program funds are depleted. Eligible businesses must operate a location in New York State, have 100 or fewer employees, $2.5 million or less of gross receipts in the 2021 tax year, and at least $2,000 in eligible costs between Jan.  1, 2021 and Dec. 31, 2022.

Businesses are still encouraged to apply for the New York State COVID-19 Pandemic Small Business Recovery Grant Program, which provides flexible grants of $5,000 to $50,000 for small businesses for COVID-19 expenses.  However costs incurred between Jan. 1, 2021 and April 1, 2021 that were paid for with proceeds from this grant program are not eligible for a tax credit under the COVID-19 Capital Costs Tax Credit Program.

To receive a tax credit for their 2022 tax return, businesses must receive a tax credit certificate from ESD on or before Dec. 31, 2022. Potential applicants are urged to complete the screening tool and apply as soon as the program is launched, as any tax credits issued on or after Jan. 1, 2023 cannot be claimed until a business’s 2023 tax return. For more detailed information visit the ESD website.

“Small businesses had to incur significant expenses to reopen safely during the pandemic, and with those costs continuing to mount, they need our support more than ever,” State Sen. Anna Kaplan and sponsor of the COVID-19 Capital Costs Tax Credit Program, said in a statement.

She said the program “will help minimize the financial impacts incurred by small business owners to stay safe and stay open, and I encourage every small business owner to use the new screening tool to see if they’re eligible to get relief through the program when it opens.”