If your company operates in New York and meets the definition of a “qualified emerging technology company” (a “QETC”) it is eligible for New York tax credits.  Additionally if you are a New York State taxpayer and interested in investing in a QETC you may be eligible to claim a credit as well.

A “QETC” is:

  • A company located in New York State,
  • With total annual sales of product under $10,000,000, and
  • Either one of the two below:
    • its primary products or services include “emerging technologies”:
      • Advanced materials and processing technologies
      • Engineering, production, and defense
      • Electronic and photonic devices and components
      • Information and communications technologies
      • Bio- and nano-technologies
      • Remanufacturing technologies, or
    • the company has research and development activities in New York State, and its ratio of such activities to net sales equals or exceeds the average ratio for all companies as surveyed by the National Science Foundation (average was 3% recently).
  • Additionally, the company must also be certified by the New York State Commissioner of Taxation and Finance (for the Capital Tax Credit), based on the foregoing criteria.

The credits available to a QETC, or investors in QETCs, are:

  1. An Employment Credit for job creation – this credit is equal to the average number of full-time employees in New York State for the current tax year, minus the base year employment (average number of full-time employees in New York State during the three years immediately preceding the first year the credit was claimed), multiplied by $1,000.  This is available for three consecutive tax years.
  2. A Capital Tax Credit for investors in a QETC – this credit is based on the amount of each qualified investment made by a taxpayer into a certified QETC. A “qualified investment” is a contribution of money or property by a non-owner to a corporation or tax partnership (i.e. an LLC that has not checked the box) in exchange for equity. The credit is equal to:
    1. Ten percent of qualified investments in certified QETCs, if the taxpayer certifies to the Commissioner of Taxation and Finance at the time the credit is claimed that the qualified investment will not be sold, transferred, traded, or disposed of within four years from the close of the tax year in which the QETC capital tax credit is first claimed, and
    2. Twenty percent of qualified investments in certified QETCs if the taxpayer certifies to the Commissioner of Taxation and Finance at the time the credit is claimed that the qualified investment will not be sold, transferred, traded, or disposed of within nine years from the close of the tax year in which the QETC capital tax credit is first claimed.