New York State recently announced that an agreement has been reached on the 2014-15 State Budget. The Budget contains numerous changes to New York’s tax laws including changes to estate, franchise, personal, sales and use, and real property taxes. The following is a highlight of the tax changes contained in the Budget

 

ESTATE TAX

  • Increased Exclusion Amount: The exclusion threshold of the estate tax is increased from
    $1 million to eventual conformity with the Federal exemption amount of $5.25 million and reduces the top tax rate from 16 percent to 10 percent over four years;

FRANCHISE TAX

  • Reduction of Franchise Tax: Reduction of the corporate franchise tax rate from 7.1% to 6.5% beginning January 1, 2016;
  • Extension of the Empire State Commercial Production Tax Credit: The Empire State Commercial Production Tax Credit was extended for two years. According to the 2014-15 New York State Executive Budget Revenue Article Memorandum in Support, the credit is available to qualifying corporate and individual taxpayers in an amount equal to 20 percent of the qualifying production costs incurred in the actual filming or recording of a qualified commercial in New York that exceed the average of the previous years’ costs for which the credit was applied, plus 5 percent of costs if costs exceed $500,000 in the calendar year in the Metropolitan Commuter Transportation District (MCTD) and above $200,000 in the calendar year outside the MCTD.

PERSONAL INCOME TAX

  • Homeowners and Renters Credit: Personal income tax credit for homeowners and renters in
    New York City earning less than $200,000.
  • Increase Personal Income Tax Filing Income Threshold: The income threshold at which persons must file returns is increased from $4,000 to match the amount of the federal standard deduction.
  • Repeal the Personal Income Tax Add-on Minimum Tax: The add-on minimum tax which is
    imposed on 200 taxpayers and which generates only $200,000 annually is eliminated.
  • Extension of the Non-custodial Earned Income Tax Credit: The credit for parents who pay
    child support for a qualifying child with whom they do not reside has been extended for two years.
  • Extension of the Empire State Commercial Production Tax Credit: see above

SALES AND USE TAX

  • Increase in Sales Tax Exemption for Vending Machine Sales: The Budget increases the sales
    tax exemption threshold for sales through vending machines from 75 cents to $1.50.

REAL PROPERTY TAX

  • 20 Percent Credit for Manufacturers Who Own/Lease Property: The Budget introduces a new refundable real property tax credit for qualified New York manufacturers under Article 9-A (corporate franchise tax) equal to 20 percent of the real property tax paid on property used for manufacturing during the taxable year.