Gov. Andrew Cuomo unveiled on Jan. 5, as part of his 2016 agenda, a series of investments and initiatives designed to continue growing the economy and building stronger, more vibrant communities across New York state.
He said the proposals include significant tax relief for small businesses, increased funding to support municipal water infrastructure improvement projects, a new effort to revitalize and transform downtown areas in each region of the state, and a sixth round of the successful Regional Economic Development Council initiative.
According to Cuomo, Roughly 1,091,000 small businesses statewide will benefit from the 2016 proposals. Of those, 54,518 are in the Capital Region, which includes Washing, Warren and Saratoga counties.
“Over the past five years, we have redeveloped New York’s economy and restored opportunity in communities across Upstate – and now we are building on that momentum to make a difference that will last for generations,” said Cuomo. “We are going to make critical investments in infrastructure, cut taxes for small businesses, and invest in the regional approach to economic development that has made a difference across Upstate. Together we are going to continue moving this state forward.” Small businesses are the backbone of the state’s economy, accounting for 43 percent of all private sector jobs in New York, the governor said.
The governor claims his latest proposal is projected to save small businesses some $298 million annually, bringing the total savings statewide from the new program to nearly $1.2 billion by 2021.
To continue growth of the small business sector and help further the expansion of New York’s economy, taxes are being lowered both for small businesses who pay via the corporate tax and those paying through the personal income tax, Cuomo said.
For small businesses that file under the corporate tax code, the governor proposes to reduce the net income tax rate from the current 6.5 percent to 4 percent effective January 1, 2017. For the purpose of this tax cut, the definition of “small business” is a business with less than 100 employees, with net income below $390,000.
Small businesses have traditionally paid a lower rate than large corporate taxpayers, but tax cuts passed in 2015 lowered the corporate tax rate to the level currently being paid by small businesses. Cuomo proposes to preserve the small business tax advantage by lowering their rate even further. To avoid a “cliff” the lower tax rates would be available to small businesses having below $290,000 in net income, and the rate is phased up to the standard rate applicable to businesses with net income of $390,000 or more.
For small businesses whose members pay taxes via the personal income tax, Cuomo proposes new and expanded tax cuts. Currently, sole proprietor and farm small businesses can subtract five percent of their income from tax calculations. The governor proposes to increase the exclusion to 15 percent of income.
Further, in order to create tax parity between small business types, the Executive Budget also expands this tax cut to other types of small businesses. Members of partnerships, S corporations, and LLCs will be able to exclude 15 percent of business income as long as some of their business income is derived from a business entity with less than $1.5 million in New York gross receipts, and their total business income from these sources is below $250,000.
Cuomo’s Executive Budget also includes $250 million in funding to support drinking water and wastewater infrastructure projects across the state, with half distributed to municipalities this year and the remaining half in 2017. Allocations will be administered by the Environmental Facilities Corporation, and the Departments of Health and Environmental Conservation.
This proposal increases by $100 million the Water Infrastructure Improvement Act of 2015, which was approved during the 2015-16 state budget to support grants over three state fiscal years. Last year, Governor Cuomo announced that $50 million of funding was awarded to 45 projects across the state, leveraging more than $440 million in water infrastructure investments. In total, this $300 million investment will leverage more than $1.5 billion in local investment in water infrastructure improvements across the state.