Business Corporation Tax

Department of Finance


Business and Excise TaxesBusiness ResourcesBenefitsDoing Business with NYC


Business corporation tax

For tax years beginning on or after January 1, 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 $1 million or more are also subject to tax. The new tax is being referred to as the business corporation tax.

Business corporation tax regulations

The Department of Finance (DOF) is in the process of developing regulations for the business corporation tax, enacted in 2015. On December 27, 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.

Public input

In order to receive tax practitioners’ and policy advocates’ perspectives, DOF conducted two public virtual discussion sessions on May 14th and May 15th, 2024, and received comments both in writing and at the sessions themselves. Thank you to those who attended the virtual information sessions and provided feedback.

Based on the comments and questions that were submitted, we have prepared an update on the issues discussed during the discussion sessions.

You can still submit written comments regarding the differences between DOF’s proposed regulations and the state’s regulations, or any other matter related to DOF’s proposed regulations.

Economic Nexus Standard Effective for 2022

For tax years beginning on or after January 1, 2022, the Administrative Code now provides that corporations deriving receipts of $1 million or more from New York City sources will be subject to the business corporation tax. A corporation with less than $1 million, but at least $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 $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 January 1, 2024:

The threshold at which a corporation and a unitary group are deemed to be deriving receipts from activity in New York City is:

$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:

$11,000.

Additionally, the existing economic nexus provisions for credit card issuers have been amended and expanded for 2022. Please see Finance Memorandum 22-3 and Administrative Code Section 11-653(1) for more on these changes.

Who has to pay this tax?

Corporations that do business, employ capital, or own or lease property, or maintain an office in the city in a corporate or organized capacity must pay this tax.

The term corporations includes any entity that is taxable as a corporation for federal tax purposes, by election or otherwise, and so may include:

Limited Liability Companies

Joint stock companies or associations, and

Businesses conducted by trusts

Publicly traded partnerships that did not elect out of City corporate taxation in 1996 are also characterized as corporations

A corporation may be considered to do business in the City if it is a partner or member in a partnership that does business, employs capital, own or lease property in the City, or maintains an office in the City

A corporation is also considered to do business in the City if it:

Issued credit cards to 1,000 or more customers who have a NYC mailing address;

Has merchant customer contracts with 1,000 or more merchants located in the City to whom the corporation remitted payments for credit card transactions; or

The sum of its NYC credit card customers and NYC credit card merchants equals 1,000 or more

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

Publicly traded partnerships that were subject to the City Unincorporated Business Tax in 1995 and made a one-time election not to be treated as a corporation and, instead, to continue to be subject to the Unincorporated Business Tax for tax years beginning in 1996

Insurance corporations

Publicly supervised utilities

Partnerships and limited liability companies that are characterized as partnerships for federal income tax purposes (but see the Unincorporated Business Tax)

Foreign corporations that do not qualify as doing business in the city under a de minimis activities standard in Administrative Code section 11-653(2)

An alien corporations if:

Its activities are limited to investing or trading securities for its own account within the meaning of the federal safe-harbor contained in section 864(b)(2) of the Internal Revenue Code, or

It has not elected to be taxable as a domestic corporation and has no effectively connected income for federal income tax purposes.

Tax bases and rates

The tax applies to business income, however, business capital and gross receipts are alternative minimum tax bases

Business Income Base Tax Rates

Type of Business
Rate in Tax Year 2015 and thereafter

Qualified manufacturing corporations
4.425%-8.85%

Small businesses

6.5% - 8.85%

Financial corporations

9%

Remaining taxpayers

8.85%

Qualified manufacturing corporations must meet certain property and receipts tests. For more information see here.
Small businesses qualify depending on their level of income.
Financial corporations are corporations, or combined groups that meet the definition set forth in Administrative Code section 11-654(1)(e)(1)(i).
Business Capital Base Tax Rates

Type of Business
Rate in Tax Year 2015 and thereafter

Cooperative housing corporations

.04%

All other corporations

.15%

Modification: The portion of total business capital directly attributable to stock in a subsidiary that is taxable as a utility within the meaning of the New York City Utility Tax or would have been taxable as an insurance corporation under the former New York City Insurance Corporation Tax
.075%

The maximum tax is $10 million.

A $10,000 reduction applies to all capital tax calculations (provided that the capital tax cannot be less than $0).

Fixed Dollar Minimum (FDM) Amounts

If New York City Receipts are:
Fixed Dollar Minimum Tax is:

Not more than $100,000
$25

More than $100,000 but not over $250,000
$75

More than $250,000 but not over $500,000
$175

More than $500,000 but not over $ 1 million
$500

More than $1 million but not over $5 million
$1,500

More than $5 million but not over $25 million
$3,500

More than $25 million but not over $50 million
$5,000

More than $50 million but not over $100 million
$10,000

More than $100 million but not over $250 million
$20,000

More than $250 million but not over $500 million

$50,000

More than $500 million but not over $1 billion

$100,000

More than $1 billion

$200,000

Allocation of business income

A single receipts factor apportionment methodology is being phased-in on the same schedule as the current General Corporation Tax and will be fully effective for tax years beginning on or after January 1, 2018

Customer sourcing rules determine whether receipts are derived from activity within the City for purposes of the receipts factor

Small to mid-sized taxpayers will have a one-time election to continue using property and payroll to apportion income in tax years beginning on or after January 1, 2018

Receipts from services are generally sourced to the City if the customer receives the benefit of the service in the City

Current sourcing rules generally continue for:

Rentals of real and tangible personal property

Broker/dealer activities, except as described above

Credit card interest, fees, penalties, service charges, merchant discounts, and credit card fees;

Services provided to a Regulated Investment Company

Advertising

Combined reporting

Domestic corporations and alien corporations, to the extent of their U.S. effectively connected income, may be permitted or required to file a combined report if they conduct a unitary business and have common ownership or control (more than 50% of voting stock)

Combination across tax types remains prohibited

The combined group is treated as if it were a single tax entity

Commonly owned groups may also elect to a file a combined return, without regard to whether they conduct a unitary business, and the election is effective for 7 years

Expense apportionment

Investment income and other exempt income are not taxable, thus deductions for interest expenses attributable to such income are disallowed

Any actual interest expense attribution that exceeds income must be added back to income

For more information see here

In lieu of computing actual interest expenses disallowed, taxpayers generally may make a revocable election to reduce investment income and other exempt income by 40%

Net operating loss

Net operating losses (NOLs) that were incurred before 2015 are converted into a Prior Net Operating Loss Conversion (PNOLC) subtraction to stabilize their value for financial accounting purposes.

A taxpayer’s NOL deduction (NOLD) is the sum of allocated business losses incurred in tax years beginning on or after January 1, 2015, less any portion of losses that were deducted as a NOLD in a prior tax year.

The NOLD is no longer limited by the federal NOLD source year or amount

The NOLD is a deduction against allocated business income and is applied after the PNOLC subtraction.

NOLD is not allowed for an NOL sustained during any year in which the corporation generating the loss was not subject to tax under Subchapter 3-A.

NOLs can be carried back 3 years, except that no NOL earned in 2015 or later can be carried back to a tax year beginning before January 1, 2015, and must be carried back to the earliest year first

Frequently asked questions (FAQs)

Important definitions

Business income is entire net income minus investment income and other exempt income

Entire net income is the total net income from all sources subject to certain statutory modifications

Business income includes the following:

Interest income and gains and losses from debt instruments or other obligations, unless the income cannot be included in allocable business income under the U.S. Constitution

Gains and losses from stock of a corporation conducting a unitary business with the taxpayer

Dividends and gains and losses from stock that does not qualify as investment capital

Dividends and gains from stock that do not qualify as investment income because gross investment income exceeds 8% of ENI

Income from cash

Investment income is generally income from stocks of non-unitary corporations that, in addition to certain other statutory criteria, are properly identified as investment capital and are capital assets for federal income tax purposes. For more information, see here and here. If a corporation owns or controls less than 20% of voting power of the stock of a corporation, the corporation is presumed to not be conducting a unitary business with the corporation. Gross investment income cannot exceed 8% of the taxpayer’s ENI, and any excess is characterized as business income.

Other exempt income is the sum of exempt CFC income and exempt unitary corporation dividends

Exempt CFC income is income received from a controlled foreign corporation that is conducting a unitary business with the taxpayer but is not included in the combined group. This includes Subpart F income and I.R.C. §956 dividends.

Exempt unitary dividends are dividends from unitary corporations not in the combined group because they are: (1) taxable under another tax chapter, (2) alien corporations that are not deemed domestic and have no ECI, (3) insurance corporations that are not taxable under Subchapter 3-A, or (4) less than 50% directly or indirectly owned or controlled by the taxpayer.

Filing dates

For tax years beginning before January 1, 2016:

Annual returns and tax payments must be postmarked by March 15 of the following year, if the corporation chooses an accounting period that is based on the calendar year

A corporation that uses an accounting period other than the calendar year (e.g., a fiscal year) must file a return on the 15th day of the third month after the close of its fiscal year

For tax years beginning on or after January 1, 2016:

Annual returns and tax payments must be postmarked by April 15 of the following year, if the corporation chooses an accounting period that is based on the calendar year

A corporation that uses an accounting period other than the calendar year (e.g., a fiscal year) must file a return on the 15th day of the fourth month after the close of its fiscal year

Automatic Extension
Businesses that are subject to the business corporation tax may get an automatic six-month extension by filing Form NYC-EXT. This extension is given only if the extension form is filed on or before the original due date for the return and the tax was estimated correctly and paid. The application will be denied if the estimated amount of tax is not correct or if it is not paid on or before the original due date.
Additional Extensions
A business with a valid six-month extension may request up to two additional three month extensions by filing Form NYC-EXT.1. A separate form must be filed for each three month extension requested.
Paying Estimated Tax
For tax years beginning before January 1, 2016, if the preceding year’s tax was more than $1,000, the taxpayer or combined group, as applicable, must pay an amount equal to 25% of this tax at the time the preceding year’s tax return is filed or at the time a request for an extension is filed, as the first installment of estimated tax for the current year.
For tax years beginning on or after January 1, 2016, if the second preceding year’s tax was more than $1,000, the taxpayer, or combined group, as applicable must pay an amount equal to 25% of this tax on or before March 15, as the first installment of estimated tax for the current year. Filers that use an accounting period other than the calendar year must pay this amount at the time the preceding year’s tax return is filed or at the time a request for an extension is filed.

If the requirement for filing a Declaration of Estimated Tax is first met…

The Due Date for Filing is…

Before June 1
June 15

June 1, up to August 31

September 15

September 1, up to November 30
December 15

Instead of the December 15 Declaration, a completed tax report, with payment of balance due, if any, may be filed by February 15 of the following year.

For filers that use an accounting period other than the calendar year, the corresponding months of the accounting period should be substituted for the months specified above. If a due date falls on a weekend or a legal holiday, the filing must be made by the next business day.

Forms

2025 Estimated Business Corporations and Subchapter S General Corporations - NYC-400, NYC-300 (MFI)

2024 business corporation tax forms

NYC-EXT - Application for Automatic Extension of Time to File Business Income Tax Returns
File online with e-Services

NYC-EXT.1 - Application for Additional Extension
File online with e-Services

NYC-2 - business corporation tax Return
Download Instructions

Download business corporation tax Worksheet - You must attach this worksheet to amended returns reporting changes or corrections to taxable income or other bases of tax by the IRS or New York State DTF.

NYC-2.1 - Investment and Other Exempt Income and Investment Capital
Download Instructions

NYC-2.2 - Subtraction Modification for Qualified Banks and Other Qualified Lenders
Download Instructions

NYC-2.3 - Prior Net Operating Loss Conversion (PNOLC) Subtraction
Download Instructions

NYC-2.4 - Net Operating Loss Deduction (NOLD)
Download Instructions

NYC-2.5 - Computation of Receipts Factor
Download Instructions

NYC-2.5A - Computation of Receipts Factor
Download Instructions

NYC-2.5A/BC - Computation of Receipts Factor
Download Instructions

NYC-2A - Combined Business Corporation Tax Return
Download Instructions

Download Business Corporation Tax Worksheet - You must attach this worksheet to amended returns reporting changes or corrections to taxable income or other bases of tax by the IRS or New York State DTF.

NYC-2A/BC – Member’s Detail Report
Download Instructions

NYC-2S - Business Corporation Tax Return – Short Form
Download Instructions

Download Business Corporation Tax worksheet - You must attach this worksheet to amended returns reporting changes or corrections to taxable income or other bases of tax by the IRS or New York State DTF.

NYC-9.5 - Claim for REAP Credit Applied to Business, General and Banking Corporation Taxes

NYC-9.6 - Claim for Credit Applied to Business and General Corporation Taxes

NYC-9.7C - UBT Paid Credit (Business Corporations)

NYC-9.8 - Claim for Lower Manhattan Relocation Employment Assistance Program (LMREAP) Credit Applied to Business, General and Banking Corporation Taxes

NYC-9.10 - Claim for Biotechnology Credit Applied to Business and General Corporation Taxes

NYC-9.12 - Claim for Beer Production Credit

NYC-222 - Underpayment of Estimated Tax by Business and General Corporations

NYC-245 - Activities Report of Business and General Corporations
File online with e-Services

NYC-300 for 2025 – Mandatory First Installment (MFI) by Business C Corporations

NYC-399 - Schedule of New York City Depreciation Adjustments

NYC-399Z - Depreciation Adjustments for Certain Post 9/10/01 Property

NYC-400 for 2025 - Estimated Tax by Business Corporations and Subchapter S General Corporations
File online with e-Services

NYC-579-COR - Signature Authorization for E-Filed Business Corporation Tax Return

Archived business corporation tax forms (2023 - 2012)

2023

2022

2021

2020

2019

2018

2017

2016

2015

Related tax forms

Power of Attorney POA-1

DOF-1 (Change of Business Information)
DOF-1 Online

Computer Data Request

Conciliation Conference Request

Conciliation Conference (CMVT) Request
For Use By NYC Commercial Motor Vehicles Taxpayers Only

Request for Consent to Dissolution (GCT)

Request for Supplementary Information for Consent to Dissolution

Electronic Transmittal of Tax Information

Commercial Motor Vehicle Tax (CMVT) Exemption Affidavit

Letter Ruling Request Form

Tax Status Report Application

Vendor Forms

Tax credits

NYC Biotechnology Tax Credit

Dissolution requirement

Under Section 1004 of the Business Corporation Law, as of October 1, 2009, Tax Clearance must be obtained from the Department of Finance when dissolving corporations that have done business in and incurred tax liability to the City of New York. You must complete the Request for Dissolution and mail it to Department of Finance, which will send a Dissolution Consent to the address provided on the Request. The Dissolution Consent must be attached to Certificates of Dissolution that are filed with the New York State Secretary of State.

If you are not an officer of the corporation and are filing a request for dissolution on behalf of a corporation, you will need to obtain and submit a signed and dated Power of Attorney with your request.

Publications on the business corporation tax reform

Corporate Tax Reform Outline
Transitional Filing Provisions
Investment Capital Identification Requirements
Summary of Tax Provisions
New York State Corporate Tax Reform
Finance Memoranda #16-2 Direct and Indirect Attribution of Interest Deduction under the business corporation tax (Corporate Tax of 2015)
Finance Memoranda #16-3 Additional Investment Capital Identification Periods for Certain Non-Dealers under the business corporation tax (Corporate Tax of 2015)
Finance Memoranda #16-4 Transitional Filing Relief for Taxpayers Affected by New York City’s Corporate Tax Reform Legislation
Finance Memoranda #17-2 -Tax on Capital: Calculating Liabilities Attributable to Categories of Business Capital
Legal Authority
New York City Administrative Code, Title 11, Chapter 6 (Subchapter 3-A)

If you have any questions about Corporate Tax Reform, please email us. We will review your question and any response will be published in the Frequently Asked Questions (FAQs) above.