The New York Governor recently signed tax legislation as part of the state’s FY23 budget. The legislation amends the state’s pass-through entity tax (PTET) by creating a new S corporation category for entities with all resident shareholders and excluding pass-through entity taxes from the definition of “income taxes” for purposes of the addback to state taxable income. Additionally, and of significant note for New York City (NYC) resident individuals, the legislation establishes a new Tax Law Article 24-B creating a NYC PTET.
Action item: With the enactment of a new PTET in New York City and the amendments to the state’s PTET, affected businesses may want to model the impact of electing into these taxes to determine the benefit across all partners and shareholders.