NYS Benefits You Could Qualify For

NY Innovation Hot Spot Tax Benefits

 

NY Innovation Hot Spot Tax Benefits provide tax incentives for a five-year window of exemption from state corporate income tax and state sales tax on purchases. In this period, partners in the company are also eligible to deduct their income from the company. 

In 2013, New York State created the Innovation Hot Spot program to fund operations in business incubators and extend tax incentives to qualified ventures in participating incubators and accelerators. The Southern Tier Startup Alliance serves as the Innovation Hot Spot in the Southern Tier region.  

The Department of Taxation and Finance has a detailed memo that further describes the program. 

 

Qualifying members/clients of partner incubators may be eligible to apply for Innovation Hot Spot tax benefits, if they meet the following eligibility requirements:    

  • The company must be an active member in good standing of a partner incubator, be on a path toward scalable development, and must be in the formative or early stage of development.    
  • The company must be a legal entity which is less than five years old, or less than 7 years old for a life sciences company.    
  • The company must make less than $1 million dollars per year in annual revenue.   
  • The company, or a related person, is not a publicly traded entity. 

 

How do you apply? 

From November – January, companies which are members/clients of a Partner Incubator are sent an email from their respective incubator staff/leadership with a link to apply. If you would like to talk to the team prior to November, please email Jenna Rice at [email protected]. 

As required from New York State, each company will need to: 

  • Attest that it meets the eligibility requirement (as set forth above) 
  • Report annual economic impact data (capital raised, new hires, capital expenditures, revenue, etc) 
  • This data is required by Empire State Development and used to fulfill reporting requirements to New York state; any public reporting will be at an aggregated level that does not identify individual companies’ data or information 
  • Companies that meet certain thresholds of impact will be required to sign a follow-up letter attesting to these impacts 

 

The Southern Tier Startup Alliance then provides a certification letter (assuming the above is complete) that verifies that the company is affiliated with and is receiving services from an Innovation Hot Spot. This information is also included in reports to NYS.  

At this point, it is up to each company to then work with their accountant to file and claim their tax benefits. 

 

Common Questions

Q: If I meet the above criteria, am I guaranteed tax benefits?

A: No, it is ultimately up to the NYS  Department of Taxation and Finance on whether or not your company receives tax benefits.

Q: What are the partner incubators?

A: The Center for Life Science Ventures at Cornell University, IncubatorWorks Corning, IncubatorWorks Elmira, Koffman Southern Tier Incubator, Praxis Center for Venture Development, Rev: Ithaca Startup Works, Runway & Spinout Programs at Cornell Tech, Southern Tier Clean Energy Incubator, and Start-up Suite at Binghamton University are all Partner Incubators.

Q: My company is an S-Corp or an LLC that elected partnership taxation, so gains or losses flow through to my personal taxes. Are these taxes eligible for an exemption? 

A: Yes! Pass-through gains are eligible for corporate tax exemption. So, if your LLC or S-Corp is less than five years old, has less than $2m in revenue, and is generating income, there could be a pretty significant financial benefit to owners by joining a STSA incubator. 

Q: Are you my lawyer or tax advisor?

A: A: No! You should consult your own advisors to understand exactly how this tax incentive might impact the own tax situation for your company.