New York Governor Kathy Hochul has recently announced that applications are now being accepted from small businesses so long as they have completed the pre-screening process to become certified for the COVID-19 Capital Costs Tax Credit Program. This program supports companies that made investments in accordance with emergency orders and regulations or to increase public safety in response to COVID-19.
Eligible Costs and Eligibility Requirements
To enhance the state’s support for small businesses, this announcement comes as part of Gov. Hochul’s first executive budget order. This was included in the FY23 Enacted Budget. The new refundable tax relief program will target COVID-19-related expenses for infectious disease improvement during 2021 and 2022. Some of the eligible costs include:
- Supplies to disinfect or protect against COVID-19 transmission
- Costs associated with expanding, or defining space to accommodate social distancing
- HVAC equipment
- Expenses related to increased outdoor activity and outdoor space expansions
- Machinery and equipment to facilitate contactless sales
The credit will cover over 50 percent of eligible costs up to $50,000, for a maximum credit reward of $25,000. Credits will be awarded on a first-come-first-serve basis until the funds of the program are depleted (a $250 million pool). Some other eligibility requirements for businesses are as follows:
- Must operate in New York State
- Have 100 or fewer employees
- Have $2.5 million or less in gross receipts for the 2021 tax year
- At least $2,000 in eligible costs (as seen above) between Jan. 1, 2021, and Dec. 31, 2022
Application Deadline
Applications will be accepted through March 31st, 2023. To be able to claim the credit on their 2022 return, businesses must apply soon to receive a tax credit certificate from the Empire State Development (ESD) on or before Dec. 31st, 2022. Any credits issued on or after Jan. 1, 2023, can be claimed on a business 2023 tax return.
Wrap Up
This credit program is a part of a larger picture of Governor Hochul’s mission. Over $1 billion has been targeted to help support small businesses in New York in their recovery from the recent pandemic. If you think you may be eligible for this tax credit and aren’t sure of the next steps, contact a trusted financial expert for guidance.