BILL NUMBER: S1301
SPONSOR: BORRELLO
 
TITLE OF BILL:
An act to amend the tax law, in relation to establishing a first perma-
nent payroll employee tax credit
 
PURPOSE:
The purpose of this bill is to establish a first permanent payroll
employee tax credit.
 
SUMMARY OF PROVISIONS:
Section 1 of the bill amends Section 210-B of the Tax Law by adding a
new subdivision 55. This allows for a business tax credit to be avail-
able for each of the three years succeeding the date a taxpayer employs
their first full time permanent employee. The amount for the credit in
the first year is 25 percent of the total cost to employ a full-time,
permanent employee; second year, 20 percent and the third year, 10
percent. The maximum aggregate amount of tax credits paid each year
shall be capped at $15 million and be allocated by the Commissioner of
Tax and Finance.
Sections 2 and 3 amend Section 606 of the Tax Law by adding a new
subsection (kkk) and adding a new clause (xlvi) of subparagraph (B) of
paragraph 1 of subsection (i). The total cost to employ shall mean the
base salary, New York state payroll taxes and the value of employment
benefits received.
Section 4 of the bill provides the effective date.
 
JUSTIFICATION:
Small businesses in New York have a difficult time becoming established
in a challenging economic climate burdened with regulatory expenses and
excessive taxes. We need to provide incentives to encourage small busi-
nesses to grow and promote a thriving workforce. According to the Tax
Foundation's State Business Tax Climate Index, New York ranks second
worst among 50 states.
This legislation would provide a state income tax credit for the first
permanent payroll employee hired by an entrepreneur. Once a sole
proprietorship moves to having paid employees, owners are responsible
for workers compensation insurance and added business costs.. The First
Employee Tax Credit will help ease the disproportionate rise in costs
that results from adding just one employee. Providing a tax credit will
incentivize small business owners to grow, allowing New Yorkers to
succeed in our state's economy with more people looking to start their
own small businesses.
 
LEGISLATIVE HISTORY:
2024: S432/A1755 Referred to Budget and Revenue
2023: S432/A1755 Referred to Budget and Revenue
2022: S1799/A4871 Referred to Budget and Revenue
2020: S7043/A9049 Referred to Budget and Revenue
 
FISCAL IMPLICATIONS:
The tax credit is capped at $15 million per year.
 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to taxable years
commencing on and after January 1, 2025.

Statutes affected:
S1301: 210-B tax law, 606 tax law, 606(i) tax law