On May 9, 2025, Gov. Kathy Hochul signed New York State’s 2025-2026 budget package into law, setting the stage for a robust lineup of credits and incentives targeting business growth, job creation, and economic recovery across the state. The budget brings both new and extended tax credit programs, with many incentives administered on a first-come, first-served basis until funding is exhausted.
Excelsior Jobs Program: Expanded and Enhanced
The Excelsior Jobs Program, a cornerstone of New York’s business incentives, rewards companies in targeted sectors for job creation and investment with refundable income tax credits. The 2026 budget extends the program’s expiration from 2040 to 2049 and introduces new benefits, especially for the semiconductor industry.
Key updates include:
- Excelsior Program Expansion: Companies engaged in semiconductor supply chain projects now qualify for enhanced credits as follows:
- Jobs tax credit: Up to 7% of gross wages per job for semiconductor projects (vs. 6.85% for standard projects and 7.5% for Green CHIPS projects).
- Investment tax credit: Up to 3% of qualified investment for semiconductor projects (vs. 2% for standard and 5% for green projects).
- R&D tax credit: Up to 7% of qualified expenditures for semiconductor projects (vs. 6% for standard and 8% for green projects).
- Semiconductor Research and Development Project Program: This new program offers up to a 15% tax credit for qualified investments in semiconductor R&D facilities, with a minimum $100 million investment required. Credits are available for up to 10 years and are refundable but are subject to recapture if eligibility is revoked.
- Semiconductor Manufacturing Workforce Training Incentive: This is a new workforce training credit for manufacturing businesses, including semiconductors. Eligible businesses can claim a refundable credit covering 75% of wages, training costs, and wraparound services, up to $25,000 per employee and capped at $1 million per non-semiconductor business or $5 million per semiconductor business. The annual statewide cap is $20 million.
Incentives for Moving Your Business to New York City
While some anticipated NYC-specific incentives weren’t included in the budget, two major programs were extended and launched through separate legislation.
REAP and Lower Manhattan REAP Extensions
The Relocation and Employment Assistance Program (REAP) and its Lower Manhattan counterpart now offer tax credits to businesses relocating jobs into designated NYC zones.
Key features are:
- Eligibility: Businesses (excluding retail and hotels) moving at least one job into Manhattan below 96th Street, the outer boroughs, or designated Lower Manhattan areas.
- Benefit: Up to $3,000 tax credit per eligible employee, annually for up to 12 years.
- 2026 Update: Program extended; new applicants can qualify through at least June 30, 2028.
- Credits are refundable for the first five years in certain areas but become non-refundable thereafter.
New Relocation Assistance Credit per Employee (RACE)
The RACE program incentivizes businesses outside New York State to relocate nearly anywhere within NYC, with some restrictions for Manhattan. Highlights:
- Eligibility: Businesses must have operated outside New York State for at least 24 months and have no NY-based employment as of Jan. 1, 2025. New York City locations must be non-residential, at least 10,000 sq ft, have at least 175 sq ft per employee, and Manhattan buildings must have a pre-2000 certificate of occupancy.
- Benefit: $5,000 tax credit per full-time employee, available for up to 11 years (relocation year + 10 years).
- Program cap: 3,000 employees, first-come, first-served.
- Credits are refundable for the first five years, then non-refundable. New certifications end after June 30, 2028.
Both REAP and RACE credits offset several New York City business taxes, including General Corporation, Business Corporation, Unincorporated Business, Banking Corporation, and Utility Taxes. Businesses must recertify each year to continue receiving credits.
For further assistance with these or other New York credits and incentives, contact your CBIZ State and Local Credits and Incentives professional.
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