Tax Law Update: New York State Corporate Tax Law Reform

The Impact on Companies Providing Digital Products | July.31.2014

On March 31, 2014, Governor Cuomo signed into law legislation that provides for an extensive reform of the state's corporate tax regime (the "Act"), most notably for out-of-state corporations providing digital products to New York customers. Prior to the enactment of the Act, the general corporate franchise tax law had not been substantially modified since 1945. Generally, the provisions of the Act are effective for tax years beginning on or after January 1, 2015, unless noted otherwise.

Other significant changes include a decrease in the corporate franchise tax rate, the imposition of a mandatory unitary combined reporting system, elimination of a separate tax regime for banking corporations, and the creation of various tax incentives and rate reductions for "qualified manufacturers" in the state. The changes to estate tax, property tax, and additional tax credits mean these reforms will also affect other types of taxpayers. The main provisions of the Act are outlined below. 

At this time, the enacted reforms to the New York State tax law regime generally do not apply to New York City, with limited exceptions. Conformity by New York City will require its own legislation.

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