New York Senate Bill S07643

New York 2025-2026 Regular Session

• Introduced: 4/24/25
• Refer: 4/24/25
• Refer: 1/7/26

Caption

Provides that the aggregate amount of pass-through entity credits claimed by all partners, members or shareholders of an electing partnership or electing S corporation shall not exceed eighty-seven percent of the tax due.

Summary

This bill amends New York’s tax law to reduce the cap on pass-through entity tax credits and the city pass-through entity tax credit. Under current law, the aggregate credits claimed by partners, members, or shareholders of an electing partnership, electing S corporation, electing city partnership, or electing city resident S corporation may not exceed 100% of the entity-level tax due; this bill lowers that ceiling to 87% of the tax due. The change applies to taxable years beginning on or after the first January 1 following enactment. In practical terms, the bill would leave a larger share of the entity-level tax unrecovered by owners who claim these credits, increasing the net tax paid by affected pass-through entities and their owners. It would amend two sections of the Tax Law, one governing the state pass-through entity tax and one governing the city version, and would affect partnerships and S corporations that elect into these tax regimes, including their partners, members, and shareholders.

Impact

The bill would directly amend sections 863 and 870 of the Tax Law to cap the total pass-through entity tax credits at 87% of the underlying entity tax liability, rather than allowing credits up to the full amount. This would reduce the value of the state and city pass-through entity tax credit regimes for electing entities and their owners, effectively increasing tax collections relative to current law for affected taxpayers. The bill takes effect immediately but applies prospectively to taxable years beginning on or after the next January 1 after enactment.

Sentiment

Based on the bill text and the absence of recorded committee debate or votes in the provided materials, the available sentiment appears neutral and procedural rather than contested. The measure is a targeted tax-law adjustment with a clear fiscal effect, but there is no transcript evidence showing support or opposition from legislators, stakeholders, or the public. The bill was introduced and referred to committee, indicating it was at an early stage of consideration.

Contention

The main point of contention is likely the fiscal and policy tradeoff created by reducing the credit cap from 100% to 87%. Supporters would likely view the change as a way to raise revenue or limit the cost of the pass-through entity tax credit, while opponents—particularly owners of electing partnerships and S corporations—would likely argue that it increases their tax burden and undermines the intended benefit of the credit. No specific objections or endorsements are documented in the provided committee or voting history.