Apply for Your 2024 NYC Biotech Tax Credit by January 15, 2025

On December 4, 2023, New York City Mayor Eric Adams signed legislation to reinstate the NYC Biotech Tax Credit (“Credit”) which lapsed in 2019, as part of the ongoing commitment to the growing biotechnology sector in New York City. This Credit is part of the economic growth packages promised for many years. Each eligible company is entitled to a Credit of up to $250,000 per year, with a total of $3,000,000 available annually. The New York City Council Department of Finance will determine how to allocate the aggregate amount of the Credit among eligible companies. The application deadline to claim the Credit for the 2024 calendar year is January 15, 2025.    

Credit Calculation Summary 

The Credit equals the sum of 1) 18% of the cost or tax basis of R&D property purchased and placed in service during the current taxable year, 2) 9% of qualified research expenses incurred in the current taxable year and 3) 100% of qualified high-technology training expenditures in the current taxable year, capped at $4,000 per employee. “Qualified research expenses” includes expenses associated with in-house research and development, including patent costs, but does not include expenses of outside paid consultants. “Qualified high-technology training expenditures” includes expenditures for biotech courses at accredited, degree-granting colleges or universities in New York City. A qualified emerging technology companies (“QETC”) is entitled to 100% of the aggregate Credit (capped at $250,000), provided the number of full-time employees employed by the QETC in New York City increases by 5% from the year immediately preceding the first taxable year in which the Credit is claimed, or 50% of the aggregate Credit, capped at $125,000. Finally, the Credit is not allowed to a QETC that receives space and support from an academic incubator in New York City if the number of full-time employees located in New York City does not increase by 5% or more compared to the year immediately preceding the first taxable year in which the Credit is claimed. 

Eligible companies can apply the Credit against certain New York City taxes for tax years beginning on or after January 1, 2023, and before January 1, 2026. Notably, for eligible companies who do not owe sufficient New York City taxes, the excess amount of the Credit is payable as a refund (without interest).  

Eligibility 

The Credit is available to QETCs that are engaged in “biotechnologies” and fulfill certain requirements. QETCs are companies located in New York City with total annual product sales of $10,000,000 or less and 1) whose primary products or services are classified as emerging technologies or 2) have research and development (R&D) activities in New York City and whose ratio of R&D funds to net sales equals or exceeds an average ratio (as determined by the National Science Foundation). In addition, QETCs must have 1) no more than 100 full-time employees (of which at least 75% are employed in the New York City), 2) a ratio of R&D funds to net sales of at least 6% and 3) no more than $20,000,000 in aggregate gross revenue (including that of its affiliates) in the preceding taxable year.   

Finally, the Credit is not allowed to a QETC that receives space and support from an academic incubator in New York City if the number of full-time employees located in New York City does not increase by 5% or more compared to the year immediately preceding the first taxable year in which the Credit is claimed. 

New York City has an enormous research base which has yielded some incredible emerging companies.  And in this funding environment, every dollar counts. Combined with the focus on providing real estate options, and a growing entrepreneurial support community for these companies, we are enthusiastic about the continued innovation and growth in sector for New York City.