Incentives Watch: New York’s Innovation Hot Spot Program Expected to Incubate Startup Businesses

In March, the New York Department of Taxation and Finance issued a technical memorandum explaining the various tax benefits available to certain in-state startup businesses under the New York Business Incubator and Innovation Hot Spot Program. 

An innovation hot spot is a designation given to certain business incubators that are affiliated with a college, university or independent research institution.  An incubator is a designation given to business incubation programs that provide physical space to eligible businesses, or virtual incubation programs providing assistance to eligible businesses.

Businesses eligible to participate in the program must be located in New York and include corporations, sole proprietorships, partnerships, limited partnerships, LLCs, and New York S corporations in the formative stages of development.  The business must also be approved to be located in an innovation hot spot.

Under the program, startup businesses are eligible for corporation franchise tax benefits such as a fixed dollar minimum benefit and subtraction modification benefit, sales and use tax benefits, and personal income tax benefits.  The tax benefits are available for a 5-year period.

It is important for businesses to remember that an election to claim the tax benefits under this program is irrevocable.  In other words, once a business claims the tax benefits under this program, it is ineligible for any other exemption, deduction, tax credit, or refund related to its operations in the innovation hot spot.

The program is administered by the Empire State Development agency, which may audit and periodically evaluate the business incubators.

*Continue the discussion on Bloomberg BNA's State Tax Group on LinkedIn:  Will the Business Incubator and Innovation Hot Spot program lead more businesses to remain in New York?

For more information about New York’s tax credits and incentives, check out Bloomberg BNA’s Credits and Incentives Portfolios by signing up for a free trial of the Bloomberg BNA Premier State Tax Library today.

In other developments . . .

Alabama enacted a new income tax credit for individuals and businesses that make contributions to a career-technical dual enrollment program for tax years starting on or after Jan. 1, 2015, according to a Bloomberg BNA Weekly State Tax Reportarticle.

By: Kathleen Caggiano

Follow Kathleen on Twitter at:  @katcaggiano .

Follow BBNA on Twitter at: @BBNATax .