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What is the Tax Rate for LLC Business Owners in New York?

What is the Tax Rate for LLC Business Owners in New York?

Businesses are generally are taxed on the income the derived from the state in which they were formed. Generally, this is referred to as a “corporate income tax.”  New York, corporate income tax can vary greatly depending on the entity type, tax elections made, and other financial considerations. Understanding the New York corporate tax structure can be difficult, but it is important for understanding how these taxes apply to your business and for ensuring your business is paying the appropriate amount of taxes to the state.

In New York, corporate income tax appears in the form of a “corporation franchise tax” when applied to New York C-corporations and New York S-corporations. For New York limited liability companies, limited liability partnerships, and general partnerships, corporate income tax is referred to simply as a “filing fee.”

New York Corporation Franchise Tax

Corporations

New York Corporations or, more specifically, C-corps, are subject to a corporation franchise tax that is calculated to be the higher of the New York Corporation’s Entire Net Income (ENI), Maximum Taxable Income (MTI), Fixed Dollar Minimum (FDM), or Business and Investment Capital.

Entire Net Income

A New York corporation’s ENI tax rate is dependent upon the corporation’s federal taxable income. With the exception of some qualified New York manufacturers to which a flat 6.5 percent rate applies, corporations in New York are generally only taxed at a rate of 6.5 percent on $290,000 or less of federal taxable income. For each dollar of federal taxable income in excess of $290,000 but no more than $390,000, a New York corporation is taxed at 7.1 cents on each dollar, and then at 4.35 percent for each dollar in excess of $390,000.

Federal Taxable Income ENI Tax Rate
$290,000 or less 6.5%
more than $290,000 but not more than $390,000 7.1%
More than $390,000 4.35%

Minimum Taxable Income

A New York C-corp’s MTI is equal to the entity’s income that is allocated to the State of New York. Currently, the MTI tax rate for New York corporations is 1.5 percent, however, certain New York manufacturers may qualify for a reduced tax rate is 0.75 percent.

  Fixed Dollar Minimum

Using FDM, New York C corporations pay a flat fee based on their New York State receipts rather than a percentage. These amounts can be determined using the table below.

New York State Receipts FDM Tax
not more than $100,000 $25
more than $100,000 but not over $250,000 $75
more than $250,000 but not over $500,000 $175
more than $500,000 but not over $1,000,000 $500
more than $1,000,000 but not over $5,000,000 $1,500
more than $5,000,000 but not over $25,000,000 $3,500
more than $25,000,000 $5,000

 Business and Investment Capital

New York corporations may be taxed at a rate of 0.15 percent on the total investment and business capital allocated to New York after deducting short- and long-term liabilities attributable to assets. This amount is capped at $1 million dollars for most New York corporations, however, for some qualified New York manufacturers, this amount is capped at $350,000.

S-Corporations

When speaking about S-corporations, people are typically referring to traditional corporations formed within a state that later elect for “S” status with the IRS. This “S” status exempts a corporation from paying separate federal income tax and rather enables taxable income to be passed through to shareholders who are then subject to federal tax on their shares of the s-corporation’s income.

This federal “S” election is not recognized by New York. Rather, a separate New York election form must be completed to be treated as an S-corporation for New York corporate tax purposes. New York S-corporations must pay a corporate franchise tax based on their New York receipts.

S-corporations are required to submit their corporation franchise tax according to the table below, and, in addition, S-corporation shareholders are required to pay income tax on their share of the s-corporation’s net income.

New York State Receipts Corporation Franchise Tax
not more than $100,000 $25
more than $100,000 but not over $250,000 $75
more than $250,000 but not over $500,000 $175
more than $500,000 but not over $1,000,000 $500
more than $1,000,000 but not over $5,000,000 $1,500
more than $5,000,000 but not over $25,000,000 $3,000
more than $25,000,000 $4,500

New York Filing Fee

Limited Liability Companies (LLCs) and Limited Liability Partnerships (LLPs)

New York LLCs and LLPs are not required to pay federal or state income tax. Instead, these entities must pay filing fees in accordance with their gross income, as illustrated in the table below. While New York LLCs and LLPs themselves are not required to pay income tax, it should be noted that members/owners of these entities must still pay New York state income tax on distributions that they earn from the company.

Here’s a chart to illustrate the NY LLC filing fees.

Gross Income of LLC or LLP Filing Fee
not more than $100,000 $25
more than $100,000 but not over $250,000 $75
more than $250,000 but not over $500,000 $175
more than $500,000 but not over $1,000,000 $500
more than $1,000,000 but not over $5,000,000 $1,500
more than $5,000,000 but not over $25,000,000 $3,000
more than $25,000,000 $4,500

Partnerships

New York partnerships need only pay a filing fee if their gross income exceeds $1 million.  Partners of these entities that receive distributions must still pay state and federal income tax on the distributions received.

Gross Income of LLC or LLP Filing Fee
not more than $100,000 $25
more than $100,000 but not over $250,000 $75
more than $250,000 but not over $500,000 $175
more than $500,000 but not over $1,000,000 $500
more than $1,000,000 but not over $5,000,000 $1,500

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