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New York State 2018 Budget Invests in the Life Sciences

This is Part 3 of a multi-part series. Please take a moment and read through Part 1  and Part 2 and Part 4.
The recently enacted 2018 New York State budget (the “Budget”) includes targeted provisions to attract and retain firms in the “life sciences.” 

What are considered life sciences?  The definition in the Budget is broad, yet very specific — “agricultural biotechnology, biogenerics, bioinformatics, biomedical engineering, biopharmaceuticals, academic medical centers, biotechnology, chemical synthesis, chemistry technology, medical diagnostics, genomics, medical image analysis, marine biology, medical devices, medical nanotechnology, natural product pharmaceuticals, proteomics, regenerative medicine, RNA interference, stem cell research, medical and neurological clinical trials, health robotics and veterinary science.”  Further, a “life sciences company” is “a business entity or an organization or institution that devotes the majority of its efforts in the various stages of research, development, technology transfer and commercialization related to any life sciences field.”

The Budget provides the following -- 

  • The existing Excelsior Jobs Program Act – which encourages businesses to expand in and relocate to New York – is extended to life sciences companies.  To participate, a business operating predominantly as a life sciences company must create at least 5 net new jobs or meet certain other criteria.  Such companies are now eligible for the (i) existing refundable Excelsior investment tax credit (2% of qualified investments), (ii) R&D tax credit (50% of federal R&D tax credit up to 3% of research expenditures in New York State), (iii) jobs tax credit (6.85% of gross wages paid for each net new job created in New York State) and (iv) real property tax credit (a percentage of eligible real property taxes on certain real property).  The Budget also enables the Excelsior Jobs Program to issue credits for an additional 3 years over prior law (through the 2029 taxable year).
  • New life science businesses can receive a 15% refundable tax credit on all new qualifying R&D expenditures, with the rate increasing to 20% for small new businesses with less than 10 employees. The tax credit is available to new life science companies for a period of up to 3 years.  The maximum amount of credits allowable to a qualified life sciences company, or if it is included in a combined report, then to the combined group, is $500,000 in any taxable year.  R&D expenditures for this purpose have the same meaning as “qualified research expenses” for the federal R&D tax credit, except it does not include certain “contract research expenses.”

These provisions take effect immediately and apply to taxable years beginning on or after January 1, 2018.

Richard Shapiro, Tax Director and member of EisnerAmper Financial Services Group, has over 35 years' experience in federal income taxation, including the taxation of financial instruments and transactions, both domestic and international.

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