TITLE OF BILL: An act to amend the tax law, in relation to
establishing a tax credit for low income individuals subject to the
federal self-employment tax
This bill will decrease the tax burden for low income individual
taxpayers who are self-employed by extending to qualifying individuals
a state-level tax credit. This tax credit will help facilitate the
success of small businesses throughout the state of New York.
Summary of Provisions:
Section I declares the need for low income individuals that are
self-employed and therefore subject to federal self-employment taxes a
state-level tax credit.
Section 2 details the "Self-employed taxpayer credit," which will be a
credit equal to twenty-five percent of the individual's
federal-self-employment taxpayer liability for the year, but kept from
exceeding five hundred dollars.
Subsection (2) defines "qualified self-employed taxpayer" as an
individual taxpayer, whose federal gross income is below forty
thousand dollars, and whose business income in the year is an amount
of at least seventy percent of the individual's federal gross income.
Business entities are not included.
Subsection (3) details how to phase out maximum credit. Specifically,
to reduce dollar for dollar for each dollar beyond thirty-nine
thousand five hundred dollars of federal gross income upon achieving
forty thousand dollars in which tax credit will have been entirely
Section 3 establishes that such act shall take effect immediately and
shall apply to taxable years beginning on or after January 1, 2014/
Entrepreneurs and individually owned and operated business is a large
portion of New York States economy. Small businesses are vital in a
transitioning economy and as a State we must do all in our power to
encourage the desire to work for ones self. It is increasingly
difficult for independently owned and operated business owners to earn
a sustainable living if their business is yielding less than
anticipated revenue in the face of federal-employment taxes and state
To help alleviate the obstacles preventing the future
entrepreneurship, and to ensure success of current small businesses
and start-ups, the State of New York should provide a state
implemented incentive in the form of a tax credit to help encourage
Prior Legislative History:
Financial Implications: To be determined.
This act shall take effect immediately and shall apply to taxable
years beginning on or after January 1, 2014.
S T A T E O F N E W Y O R K
2013-2014 Regular Sessions
I N A S S E M B L Y
April 30, 2013
Introduced by M. of A. TEDISCO -- read once and referred to the Commit-
tee on Ways and Means
AN ACT to amend the tax law, in relation to establishing a tax credit
for low income individuals subject to the federal self-employment tax
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Legislative intent. The legislature recognizes the need to
2 alleviate the tax burden of low income individual taxpayers whose income
3 is largely derived from self-employment and therefore affected by feder-
4 al self-employment taxes to a degree disproportionate with such taxpay-
5 ers' level of disposable income. This circumstance hinders many newly
6 started businesses in the state. Therefore, this act provides a state-
7 level credit to provide relief to these taxpayers.
8 S 2. Section 606 of the tax law is amended by adding a new subsection
9 (ww) to read as follows:
10 (WW) SELF-EMPLOYED TAXPAYER CREDIT. (1) GENERAL. A QUALIFIED SELF-EM-
11 PLOYED TAXPAYER SHALL BE ALLOWED A CREDIT AGAINST THE TAX IMPOSED BY
12 THIS ARTICLE EQUAL TO TWENTY-FIVE PERCENT OF HIS OR HER FEDERAL SELF-EM-
13 PLOYMENT TAX LIABILITY FOR THE YEAR, BUT NOT EXCEEDING A MAXIMUM AMOUNT
14 OF FIVE HUNDRED DOLLARS, AND SUBJECT TO PHASE-OUT AS PROVIDED UNDER
15 PARAGRAPH THREE OF THIS SUBSECTION.
16 (2) DEFINITION OF "QUALIFIED SELF-EMPLOYED TAXPAYER". A QUALIFIED
17 SELF-EMPLOYED TAXPAYER IS AN INDIVIDUAL TAXPAYER, WHOSE FEDERAL GROSS
18 INCOME FOR THE TAX YEAR IS BELOW FORTY THOUSAND DOLLARS, AND WHOSE BUSI-
19 NESS INCOME IN THE YEAR IS AN AMOUNT OF AT LEAST SEVENTY PERCENT OF HIS
20 OR HER FEDERAL GROSS INCOME. BUSINESS ENTITIES SHALL NOT BE QUALIFIED.
21 (3) MAXIMUM CREDIT PHASE-OUT. THE MAXIMUM ALLOWED CREDIT OF FIVE
22 HUNDRED DOLLARS SHALL BE REDUCED DOLLAR FOR DOLLAR FOR EACH DOLLAR
23 BEYOND THIRTY-NINE THOUSAND FIVE HUNDRED DOLLARS OF FEDERAL GROSS
24 INCOME, SUCH THAT THE CREDIT IS COMPLETELY PHASED OUT UPON REACHING
25 FORTY THOUSAND DOLLARS OF FEDERAL GROSS INCOME.
26 S 3. This act shall take effect immediately and shall apply to taxable
27 years beginning on or after January 1, 2014.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.