Wage Tax Credit

The EZ program allows a Wage Tax Credit (WTC) to certified businesses for additional full-time employees, who receive Empire Zone wages for more than one-half of the tax year. This credit is $3,000 for targeted employees paid at least 135% of the minimum wage and $1,500 for other individuals employed in jobs created in an area designated, or previously designated, as an Empire Zone. If an employee is shifted between two related businesses, the employee will not be counted for the WTC if the first employer was allowed a WTC for that employee. The wage tax credit is taken on the New York State corporate or personal tax for up to five consecutive years, beginning with the first tax year in which the eligibility requirement is met.

For tax years 1/1/2005 and after, certain businesses may be eligible for an additional $500 for each qualifying employee who received wages in excess of $40,000. This increased incentive depends on the location of the business. Please contact EZ staff to see if your business qualifies.

Eligibility Requirement

There are three criteria that must be met to be eligible for the Wage Tax Credit:

  1. The business must be Empire Zone certified.
  2. The business must increase employment in the Zone and in the state.
  3. The business must be paying Empire Zone wages (Zone wages are paid once a business is certified and begins to pay wages). These wages are for jobs created after the Zone was designated at the business's location.

If these three criteria are met, then the business can take the Wage Tax Credits for qualifying employees.

Qualifying Employees:

  • Employees must work at least half of the tax year.
  • Employees that are leased are eligible for the wage tax credit.
  • General Executive Officers do not qualify for the credit.
  • Two or more employees working a combined 35 hours or more a week are eligible.
  • All jobs created in the Empire Zone after the property is designated in the EZ are eligible as long as they are still in existence during the current taxable year.

Targeted employees must be certified by the Department of Labor Community Services Center. Employers should contact the Poughkeepsie office at 845.473.9000. (See also Business Certification.) Targeted groups may include individuals who are disabled, dislocated workers, Vietnam veterans, those receiving aid to dependent children, honorably discharged members of the armed forces, and those who are eligible for On-the-Job Training programs or other assistance.

Carryover or Refund

The amount of the tax credit or carryover may not exceed 50% of the tax imposed under the franchise taxes (50% of the tax imposed on insurance companies subject to the limitation of Section 1505) or personal income tax. Any portion of the credit not deducted by reason of the above may be carried forward and deducted in the following year or years. For franchise tax, the credit or carryover of the credit also 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 business corporations; (2) the alternative minimum tax for banking corporations; (3) the fixed dollar minimum for insurance corporations.

A new business taxed as a business corporation, or the owner taxed under personal income tax of a new business, may elect to treat 50% of the wage tax credit carryover as a tax overpayment in the tax year the credit was allowed and have the overpayment refunded or credited against any outstanding tax liability. In order to receive this refund or credit, the business must meet NYS Tax and Finance's definition of a new business.

Please contact EZ staff to discuss eligibility requirements for the Wage Tax Credit.