Established as part of the 2022-2023 NYS Budget, the COVID-19 Capital Costs Tax Credit Program seeks to support small businesses that incurred additional costs and expenses as a result of the COVID-19 pandemic. This Program allows small businesses to receive a tax credit of 50% of qualifying expenses up to a maximum of $50,000, which would result in a maximum credit of $25,000.

For a small business to qualify for this credit, it must:

• be an independently owned and operating  business in New York State
• have 100 or fewer employees
• have Gross Receipts less than $2.5 million
• have incurred at least $2,000 of qualifying expenses between January 1, 2021, and December 31, 2022

Businesses must first complete the eligibility screening tool on the State’s website. This screening will determine if your business qualifies for the program. Once qualification is verified, you will be emailed a link to complete the application as well as submit documentation to show proof of expenses. Applications are accepted on a first come, first served basis, so complete the eligibility screening tool and all subsequent steps as soon as possible.

Some of the more common qualifying expenses for this credit are the following:

• supplies to disinfect and/or protect against COVID-19 transmission
• physical barriers and sneeze guards
• hand sanitizer stations
• respiratory devices such as air purifier systems installed at the business entity's location

The complete list of qualifying expenses can be found on New York’s website.

Businesses that received assistance due to the COVID-19 pandemic through the SBA Payroll Protection Program (PPP), Economic Injury Disaster Loan program (EIDL), Restaurant Revitalization Fund (RFF) and the New York Forward Loan program would still be eligible to apply for this credit. However, if the proceeds from any of the above programs went towards any of the qualifying expenses eligible under this new tax credit, those expenses would not qualify and or would be reduced.

This Program is being administered by Empire State Development (ESD). ESD will issue a tax credit certificate to qualifying small businesses in the amount they are eligible to receive. In order to claim the credit on the 2022 tax return, the taxpayer would need to receive the tax certificate on or before December 31, 2022. Any tax certificates received in 2023 would be claimed on the business’s 2023 tax return.

For more information regarding the COVID-19 Capital Costs Tax Credit, please refer to the New York State's website . If you have any questions on the COVID-19 Capital Costs Tax Credit Program and how it could affect you, please contact your tax advisor at Dermody, Burke & Brown.

The information reflected in this article was current at the time of publication.  This information will not be modified or updated for any subsequent tax law changes, if any.