Significant new benefits are now available to businesses located within New York State’s Empire Zones. The “Empire Zone” program (formerly known as Economic Development Zones) retains and enhances the existing benefits while adding three new Empire Zone credits available to qualifying businesses.

The three new Empire Zone ("EZ") credits are:

1. A tax reduction tax credit (effective January 1, 2001);

2. A real property tax credit (effective January 1, 2001); and

3. A sales tax exemption for tangible personal property and services (effective March 1, 2001).

To qualify for Empire Zone credits, a business must:

Be EZ-certified prior to July 1, 2005.

Maintain or increase employment in the Zone and in New York State in the year they are qualifying based on a previously determined five-year average employment number.

The Tax Reduction Tax Credit

 is applied against business corporate taxes, personal income taxes, banking corporation taxes and insurance corporation taxes. The credit is computed by formula based on the number of jobs created, the company’s assets in the Zone and in New York State, and the income taxes owed. The credit is available for a 14-year period - 10 years at 100%, decreasing 20% each year thereafter.

The Tax Reduction Credit may reduce the company’s New York State tax liability below the alternative minimum tax to as low as zero if the business is located entirely within the zone, or as low as the fixed dollar minimum where the business has locations both in and outside the zone.

The Real Property Tax Credit

is also applied against business corporate taxes, personal income taxes, banking corporation taxes and insurance corporation taxes. The credit is computed by formula based on the number of jobs created and the real property taxes paid on property in the Zone. The credit is available for a 14-year period - 10 years at 100%, decreasing 20% each year thereafter.

The Real Property Tax Credit may reduce the company’s New York State tax liability to the alternative minimum tax or the fixed dollar minimum. Unused credits may be obtained as a cash refund in the year in which they were earned.

The Sales Tax Exemption

from the 4% (or 4¼% in the Metropolitan area) New York State sales and use taxes for tangible personal property and services sold to a qualified business is available beginning March 1, 2001. Local governments have the option to participate and may elect to do so on an annual basis. (New York City has not elected to participate.) A company must register with the New York State Department of Taxation & Finance and be issued an exemption certificate. The certificate is valid for a 10-year period as long as the business meets or exceeds its base year employment number.

In addition to these new credits, the existing EZ credits will remain in effect:

¤A five year wage tax credit (beginning 1/1/2001 the credit will be increased to $3,000 for targeted employees and $1,500 for non-targeted, up from $1,500 and $750);

¤A 10% investment tax credit and three-year 3% employment incentive credit;

¤A sales tax refund for building materials;

¤A 25% zone capital tax credit;

¤A Section 485e real property tax abatement;
and Utility rate reductions.