New York Assembly Bill A07016

New York 2025-2026 Regular Session

• Introduced: 3/18/25
• Refer: 3/18/25
• Refer: 1/7/26

Caption

Relates to expanding New York's manufacturing tax incentive to S corporations which are qualified New York state manufacturers.

Summary

This bill amends New York’s Tax Law to expand the state’s manufacturing incentive to certain S corporation shareholders. Under current law, S corporation shareholders generally include pass-through income in their New York taxable income, with existing modifications for some New York S corporation rules. The bill adds a new rule for distributions from S corporations that are qualified New York manufacturers, allowing shareholders to exclude or limit the taxable amount of those distributions to the lesser of the shareholder’s relevant pass-through income multiplied by the highest federal individual tax rate, or the actual distributions received during the tax year. The bill also makes conforming changes to the rules governing New York adjusted gross income and New York source income so that the new distribution-related modification is properly limited to income derived from New York sources. It applies to tax years beginning on or after the effective date, which is the first January 1 after enactment.

Impact

The bill would amend sections 612 and 631 of the Tax Law, changing how certain S corporation income and distributions are treated for New York personal income tax purposes. Its practical effect is to extend a manufacturing-related tax benefit to shareholders of S corporations that qualify as New York manufacturers, potentially reducing taxable income for those owners and aligning the incentive more closely with pass-through business structures. It would affect S corporation shareholders, especially owners of manufacturing businesses, and would require tax administrators and taxpayers to apply the new distribution limitation and source-income rules.

Sentiment

The available record shows no committee transcript, vote tally, or recorded opposition, so there is no documented debate to indicate strong support or resistance. Based on the bill’s caption and structure, the measure appears intended as a pro-manufacturing tax incentive, suggesting a generally favorable policy posture toward manufacturing businesses and their owners. However, because no discussion or votes are provided, the level of legislative consensus cannot be determined from the record.

Contention

The main policy issue embedded in the bill is whether New York should extend manufacturing tax incentives beyond traditional corporate structures to S corporations, which are pass-through entities. Potential points of contention include the revenue impact of allowing additional tax benefits, whether the benefit is narrowly targeted enough to qualified New York manufacturers, and how to define and administer the distribution limitation tied to federal tax rates and New York source income. No specific legislators, agencies, or stakeholder objections are identified in the provided materials.