A lot has been written already about a program that was launched in October of last year by New York Gov. Andrew M. Cuomo – START-UP NY. The program formally began January 1, 2014.
This new program creates New York tax-free zones throughout the state and provides the opportunity to operate state and local tax-free. For businesses that create net new jobs while partnering with higher education institutions, this means no income tax for employees and any sales, property or business tax. These business and employee tax benefits will be available for up to ten years.
Notably, there is no minimum requirement for the number of net new jobs that must be created, but all participating businesses must create jobs to receive the program’s benefits. Employees of businesses in START-UP NY will pay no NY income taxes on their wages for the first five years. For the second five years, employees will pay no New York taxes on income up to $200,000 of wages for individuals, $250,000 for a head of household and $300,000 for taxpayers filing a joint return. These individual tax breaks are a tremendous employee recruitment and retention tool, providing great benefits for companies that are hiring and creating job growth.
This platform is a perfect opportunity for technology start-up companies to receive numerous tax incentives. Technology startups that deal with research and development need to support the academic mission of the college or university with which they hope to work. Moreover, incubators affiliated with colleges or universities are eligible to be designated as tax-free zones. Eligible businesses must also:
- Be a new company in New York State; or
- Be a company from out-of-state that is relocating to New York State; or
- Be an expansion of a company that already has employees in New York State. Expanding businesses applying for START-UP NY will have to demonstrate that they are creating new jobs and not moving existing jobs from elsewhere in the State.