To keep emerging technology companies in New York, the New York City Council renewed the biotechnology tax credit for tax years beginning after January 1, 2023 and before January 1, 2026. 1 The biotechnology credit allows qualified emerging technology companies (QETCs) engaged in biotechnologies to claim up to $3 million in annual tax credits. 2 The NYC Department of Finance will undergo a rulemaking process to determine how the credit should be allocated among eligible taxpayers. 3

Eligibility Requirements

A QETC is a company located in New York City with total annual product sales of $10 million or less and meets either of the following criteria:

  • Its primary products or services are classified as "emerging technologies," 4or
  • It has research and development (R&D) activities in New York City, and its ratio of R&D funds to net sales equals or exceeds the average (as determined by the National Science Foundation, or comparable successor survey). 5

The taxpayer must also meet all the following criteria to claim the credit:

  • 100 full-time employees or less, with at least 75% of those employees employed in New York City; 6
  • A ratio of R&D expenses to net sales equal to or greater than 6%; 7
  • Gross revenues not exceeding $20 million for the immediately preceding year. 8

Mechanics of the Tax Credit

Assuming the above conditions are met, the Biotechnology Tax Credit Equals the sum of the following expenses:

  • 18% of the cost or other basis of research and development property; 9
  • 9% of qualified research expenses; 10plus
  • 100% of high-technology training expenses, limited to $4,000 per employee. 11

Footnotes

1.Int. No. 1070-A (accessible at https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=6252756&GUID=E666ABFA-22DA-43FA-B20D-63E13F398F43&Options=&Search=).

2.Id.

3.Id.

4.Id. Biotechnologies, remanufacturing, and advanced materials and processing are all considered "emerging technologies."SeePBA § 3102-e (accessible at https://www.nysenate.gov/legislation/laws/PBA/3102-E).

5.Int. No. 1070-A (accessible at https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=6252756&GUID=E666ABFA-22DA-43FA-B20D-63E13F398F43&Options=&Search=).

6.Id.

7.Id.

8.Id.

9.Research and development property is "property that is used for purposes of research and development in the experimental or laboratory sense."Id.

10.Qualified research expenses are "expenses associated with in-house research and processes... costs associated with the dissemination of development activities.... [and] costs associated with the preparation of patent applications."Id.

11.Id.

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