NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3551
SPONSOR: Jones TITLE OF BILL:
An act to amend the tax law, in relation to the business income base
rate and expanding the small business subtraction modification
PURPOSE:
Reduces the amount small businesses and farms that employ at least one
employee must pay in taxes by increasing the corporate tax threshold
from $290,000 to $390,000 and lowering the rate to 4%. In addition, it
would expand the small business exemption from 5% to 15% for net farm
and/or net business income under $250,000.
SUMMARY OF PROVISIONS:
Section 1 amends article 9-A of the Tax Law to reduce the tax rate for
corporations that are considered small corporations from 6.5% to 4%.
Section 2 amends article 22 of the Tax Law to expand the business tax
exemption to partnerships, LLCs, and S-corporations that have at least
one employee. The exemption is increased from 5% to 15% for net farm
and/or net businesses income below $250,000.
Section 3 indicates the effective date of the legislation.
JUSTIFICATION:
More than 95% of businesses in New York are considered "small busi-
nesses" according to the Small Business Administration's generally
accepted definition. These small businesses employ half of New York's
private sector workforce and generate nearly $190 billion in payroll
receipts. Further, a healthy small business ecosystem supports local
economies and makes all of New York's communities and neighborhoods more
dynamic.
The fiscal year 2014 Enacted Budget included a personal income tax
exemption for small businesses and farms equaling 5% of net income for
businesses that have less than $250,000, have at least one employee, and
are structured as a sole proprietor, LLC, partnership or "S" corpo-
ration. Most small businesses are organized as one of these "pass
through" structures. This legislation expands this exemption from 5% to
15* for these small businesses. This legislation also provides a tax
rate cut for small businesses filing under the Corporate Franchise Tax.
Together, these provisions will provide real relief to true small busi-
nesses and family farms that drive the state's economy.
LEGISLATIVE HISTORY:
03/05/19 referred to ways and means
01/08/20 referred to ways and means
02/26/20 amend and recommit to ways and means
02/26/20 print number 6309a
02/10/21 referred to ways and means
01/05/22 referred to ways and means
01/27/23 referred to ways and means
01/03/24 referred to ways and means
FISCAL IMPLICATIONS:
Estimated annual tax savings of $300 million for small businesses.
EFFECTIVE DATE:
This act shall take effect immediately and apply to tax years beginning
on or after January 1,2022.
STATE OF NEW YORK
________________________________________________________________________
3551
2025-2026 Regular Sessions
IN ASSEMBLY
January 28, 2025
___________
Introduced by M. of A. JONES -- read once and referred to the Committee
on Ways and Means
AN ACT to amend the tax law, in relation to the business income base
rate and expanding the small business subtraction modification
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subparagraph (iv) of paragraph (a) of subdivision 1 of
2 section 210 of the tax law, as amended by section 12 of part A of chap-
3 ter 59 of the laws of 2014, is amended to read as follows:
4 (iv) (A) for taxable years beginning before January first, two thou-
5 sand sixteen, if the business income base is not more than two hundred
6 ninety thousand dollars the amount shall be six and one-half percent of
7 the business income base; if the business income base is more than two
8 hundred ninety thousand dollars but not over three hundred ninety thou-
9 sand dollars the amount shall be the sum of (1) eighteen thousand eight
10 hundred fifty dollars, (2) seven and one-tenth percent of the excess of
11 the business income base over two hundred ninety thousand dollars but
12 not over three hundred ninety thousand dollars and (3) four and thirty-
13 five hundredths percent of the excess of the business income base over
14 three hundred fifty thousand dollars but not over three hundred ninety
15 thousand dollars;
16 (B) for taxable years beginning on or after January first, two thou-
17 sand twenty-six, if the business income base is not more than two
18 hundred ninety thousand dollars the amount shall be four percent of the
19 business income base; if the business income base is more than two
20 hundred ninety thousand dollars but not over three hundred ninety thou-
21 sand dollars the amount shall be the sum of (1) eleven thousand six
22 hundred dollars, (2) six and one-half percent of the excess of the busi-
23 ness income base over two hundred ninety thousand dollars but not over
24 three hundred ninety thousand dollars and (3) eighteen and thirteen
25 hundredths percent of the excess of the business income base over three
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD06719-01-5
A. 3551 2
1 hundred fifty thousand dollars but not over three hundred ninety thou-
2 sand dollars;
3 § 2. This act shall take effect immediately and shall apply to taxable
4 years beginning on or after January 1, 2026.
