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New York’s New Budget . . . What It Means to Tax Credits

New York recently enacted into law its 2013-2014 budget, which creates and amends various tax credits. Of particular interest are a new tax credit for hiring veterans, an amendment to the New York Youth Works tax credit and a new minimum wage reimbursement (student employment) tax credit.

Under the new law, a credit for hiring and employing qualified veterans in New York will be available beginning January 1, 2015, continuing through January 1, 2017. Such employees must remain employed for at least one year and work a minimum of thirty-five hours per week. Eligible veterans will have served on active duty in the U.S. Army, Navy, Air Force, Marine Corps, Coast Guard, reserves, Army or Air National Guard, New York Guard or Naval Militia receiving a general or honorable discharge after September 11, 2001.

Employment for newly hired veterans must commence between January 1, 2014 and December 31, 2015 (inclusive). Veterans must certify, by signed affidavit, they were not employed in a full-time position during the six-months prior to hire. 

The credit will be equal to ten percent of wages, up to $5,000 per hire, paid to qualified veterans during the first full year of employment. The percentage increases to fifteen percent for disabled veterans (maximum $15,000). A three-year carryover is permitted. In addition, this credit may be claimed against the corporate franchise tax, the franchise tax on banking corporations and the franchise tax on insurance corporations.

The existing New York Youth Works credit has been amended to create five distinct pools of tax credits; each a separate pool or “program” with respective timeframes and a maximum allocation per program. Specifically, Program One is for 2012 and 2013 with a maximum allocation of $25 million. Subsequent programs each have $6 million allocations, ending with Program Five in 2018.

The amended legislation provides application dates for each of the program periods. The next application period (for Program Two) is from January 1, 2014 through November 30, 2014. Employment dates for each program period are also established.

Additionally, the definition of a qualified employee has been modified to include employees residing in cities with a minimum population of 55,000; prior law dictated a minimum population of 62,000.

The new law creates a refundable tax credit for eligible employers, providing work for qualified employees. Such employees must be paid at the minimum wage rate defined under the New York labor law, must be between the ages of sixteen and nineteen during the period of minimum wage employment and be a student during the same period. For the 2014 tax year, the credit is equal to the product of the number of hours worked by eligible employees and seventy-five cents. The credit rate increases to $1.31 in the 2015 taxable year and $1.35 for 2016 and 2017. 

Learn more about leveraging tax credits and incentives with help from ADP.



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