Direct Equity

An investor who makes an investment and receives an equity interest in a certified business may be eligible for a 25% Zone capital credit, up to $100,000 per investor. The investment must contribute to a "tangible economic benefit" and must be specifically approved by the Empire Zone Administrative Board. Basic limitations include:

  • The investment must be in a certified business.
  • The certified business must employ fewer than 250 employees.
  • The investment may not be used to refinance existing debt or replace existing equity.
  • The investment may be used only for new investors.
  • Any individual investor is limited to $100,000 of tax credits.
  • The investment must remain in the business for 36 months, or a tax add-back is charged.
  • The credit may not exceed 50% of the applicable tax.

Additional allocation guidelines are established by the Zone Administrative Board. Consult the Empire Zone office for the latest requirements and guidelines.

Direct Equity Credit Carryover

For franchise tax, the credit or carryover of the credit may not reduce the tax to an amount less than (1) the tax due on the minimum taxable income base or the fixed dollar minimum, whichever is higher for a business corporation; (2) the alternative minimum tax for banking corporations; (3) the fixed dollar minimum for insurance corporations. For personal income tax, the credit or carryover of the credit may not exceed the tax imposed pursuant to section 601, less the household credit, the credit for certain household and dependent care services necessary for gainful employment, the credit for income tax paid to another state, and the credit for a resident or nonresident trust beneficiary receiving an accumulation distribution.

Any amount of unused credit may be carried forward to the following year or years. However, the amount of credit or carryover of the credit deducted from the tax otherwise due, may not in the aggregate exceed 50% of the applicable tax imposed.

If the equity is disposed before 36 months, there is an add-back. The add-back in the year of disposition or recovery is computed as follows:

  1. 100% of the credit if disposition or recovery occurs within the tax year for which the credit was allowed or within 12 months of the end of that tax year.
  2. 67% of the credit if disposition or recovery occurs more than 12 months, but not more than 24 months, from the end of the tax year in which the credit was allowed.
  3. 33% of the credit if the disposition or recovery occurs more than 24 months, but not more than 36 months, from the end of the tax year in which the credit was allowed.