BILL NUMBER: S10661
SPONSOR: COONEY
 
TITLE OF BILL:
An act to repeal certain provisions of the tax law, in relation to
restoring conformity with certain provisions of the Internal Revenue
Code relating to business expensing
 
PURPOSE:
This bill restores New York's conformity with certain federal business
expensing provisions enacted under Public Law 119-21 by repealing
provisions of the Tax Law requiring taxpayers to make separate New York
tax adjustments and calculations for qualified production property and
research and experimental expenditures.
 
SUMMARY OF PROVISIONS:
Section 1 repeals the provisions of Tax Law section 208 requiring sepa-
rate New York calculations for qualified production property and
research and experimental expenditures.
Section 2 repeals the corresponding corporate franchise tax add-back
modifications.
Sections 3 and 4 repeal the corresponding personal income tax modifica-
tions contained in section 612 of the Tax Law.
Sections 5 and 6 repeal the corresponding insurance corporation fran-
chise tax modifications contained in section 1503 of the Tax Law.
Section 7 is the effective date.
 
JUSTIFICATION:
Following enactment of H.R-1, New York enacted legislation decoupling
from several federal business expensing provisions, requiring taxpayers
to make separate New York tax adjustments and calculations rather than
relying upon the Internal Revenue Code. While intended to preserve state
revenue, these provisions increased compliance costs by requiring sepa-
rate state-level calculations for deductions already calculated for
federal tax purposes.
Specifically, this bill restores conformity with Internal Revenue Code
sections 168(n) and 174A by repealing New York's decoupling provisions
enacted in Part F of Chapter 59 of the Laws of 2026. As a result,
taxpayers will no longer be required to perform duplicative state calcu-
lations or make related add-back modifications for qualified production
property and research and experimental expenditures. The bill applies
prospectively beginning with tax year 2027 and does not alter returns
filed for the 2025 or 2026 tax years.
Federal tax law is already the starting point for New York's tax system.
Keeping conformity where practicable, lets taxpayers use one set of
calculations for both federal and state purposes instead of maintaining
separate state adjustments. Restoring conformity with the Internal
Revenue Code reduces administrative complexity, simplifies tax compli-
ance, and promotes consistency between federal and state tax adminis-
tration.
This simplification is important to New York State as an economy driven
by advanced manufacturing, optics and photonics, life sciences, higher
education, and emerging technology industries. Companies investing in
new production facilities, research laboratories, and innovative tech-
nologies benefit from a tax system that is predictable, transparent, and
consistent with federal law. By eliminating unnecessary state-specific
calculations, New York can improve its competitiveness for business
investment while allowing companies to devote more resources to expand-
ing operations, commercializing new technologies, and creating high
quality jobs.
In an increasingly competitive national landscape, businesses evaluating
where to locate new manufacturing facilities, research operations, and
capital investments consider not only tax rates, but also the complexity
and predictability of a state's tax system. Maintaining unnecessary
deviations from the federal tax code places New York at a competitive
disadvantage, creating additional compliance costs that neighboring and
competitor states may not impose. Over time, this added complexity may
discourage new businesses from investing in New York and could influence
existing employers to expand future operations elsewhere. Restoring
conformity helps ensure that New York and innovation hubs such as
Rochester remain attractive destinations for entrepreneurs, manufactur-
ers, and research-intensive industries competing in the global economy.
 
LEGISLATIVE HISTORY:
N/A
 
FISCAL IMPLICATIONS:
This bill will have an indeterminable fiscal impact on the State.
 
EFFECTIVE DATE:
This act shall take effect immediately.