NY A02457

Small businesses may establish tax-deferred savings accounts and deposit up to $5,000 per taxable year into these accounts.

Deposits and withdrawals are exempt from state income tax when used for business expansion that creates or preserves full-time jobs, including construction, renovations, equipment acquisition, and working capital improvements.

If funds are not expended for qualifying purposes, the tax exemption amount is added back to the small business taxpayer's state income tax liability in the following year or when the exemption is disallowed.

The Department of Economic Development and Department of Taxation and Finance must annually report on program participation, average deposit amounts, qualifying expenses, and economic impact.

Tax exemption provisions take effect for taxable years beginning January 1, 2018, and departments must promulgate regulations within 180 days of the act's effective date.