The deadline for submitting comments on the proposed rule is 20 November 2025.
The New York State Department of Finance (DOF) is in the process of developing regulations for the business corporation tax, which was enacted in 2015.
On 27 December 2023, the New York State Department of Taxation and Finance published a new set of regulations for the New York State corporate tax. DOF’s new regulations will be substantially similar to the state’s, with several notable differences.
For tax years beginning on or after 1 January 2015, a new corporate tax applies to corporations and banks, other than federal S corporations, that do business in New York City. Starting in 2022, corporations that derive receipts of USD 1 million or more are also subject to tax. The new tax is being referred to as the business corporation tax.
The DOF intends to implement this proposed rule process over the coming months, releasing one or more separate proposals for the remaining eight subchapters, each of which will undergo a public comment period.
Economic Nexus Standard Effective for 2022
For tax years beginning on or after 1 January 2022, the Administrative Code now provides that corporations deriving receipts of USD 1 million or more from New York City sources will be subject to the business corporation tax.
A corporation with less than USD 1 million, but at least USD 10,000 of receipts from New York City sources, will also be subject to the business corporation tax if the corporation is part of a unitary group that, in the aggregate, derives receipts from New York City sources of USD 1 million or more. These threshold amounts may be adjusted annually to reflect changes in the Consumer Price Index.
For taxable years beginning on or after 1 January 2024:
The threshold at which a corporation and a unitary group are deemed to be deriving receipts from activity in New York City is USD 1,128,000.
When determining the threshold for a unitary group, only total the receipts from corporations conducting a unitary business that meet the ownership requirements with New York City receipts of at least USD 11,000.
Who has to pay this tax?
Corporations that do business, employ capital, own or lease property, or maintain an office in the city in a corporate or organised capacity must pay this tax.
Who is exempt from this tax?
S corporations are exempt from the Business Corporate Tax, but they are still subject to the General Corporation Tax or Banking Corporation Tax. Entities exempt from corporate treatment include certain publicly traded partnerships that have elected to remain under the City Unincorporated Business Tax since 1996, insurance corporations, publicly supervised utilities, and partnerships or LLCs treated as partnerships for federal tax purposes.
The deadline for submitting comments on the proposed rule is 20 November 2025.
