New York R&D Tax Credit Glossary Capsule
This glossary provides authoritative definitions for key terms related to the New York State Research and Development Tax Credit. It covers critical concepts from Article 9-A, the Excelsior Jobs Program, and Life Sciences incentives. Designed for tax professionals and businesses, this resource clarifies terminology regarding Qualified Research Expenses (QREs), claiming procedures (such as Form CT-648), and specific eligibility tests like the Four-Part Test and Permitted Purpose requirements in New York.
| Glossary Term | Definition |
|---|---|
| Article 9-A | The section of New York tax law governing the corporate franchise tax and R&D credit framework. |
| Business Profits Tax (BPT) | A tax on business income utilized in state tax calculations affecting available credit utilization. |
| Business Enterprise Tax (BET) | A state-level tax on enterprise value or activity that interacts with research credit claims. |
| Credit for Increasing Research Activities | A tax incentive calculated based on the incremental increase in qualified research spending over a base period. |
| Qualified Research Expenses (QREs) | Eligible costs including wages, supplies, and contract research defined by tax law for credit calculations. |
| Qualified Research Expenditures Incurred in New York | Research expenses specifically arising from activities conducted within the state of New York. |
| Internal Revenue Code (IRC) Section 41 | Federal tax code section establishing the rules for the Credit for Increasing Research Activities. |
| IRC Section 174 | Federal code governing the deduction and amortization of research and experimental expenditures. |
| Wages for Qualified Services | Compensation paid to employees for directly conducting, supervising, or supporting qualified research activities. |
| Supplies Used in Research | Tangible property, other than land or depreciable property, used directly in the research process. |
| Computer Use Payments | Costs for leasing computers or cloud computing services used specifically for qualified research. |
| Contract Research Expenses (Ineligible for NY Credit) | Payments to third parties for research which generally do not qualify for the standard NY credit. |
| Basic Research Payments | Payments made to qualified non-profit organizations or universities for the advancement of science. |
| Four-Part Test | The four criteria activities must meet to qualify: permitted purpose, technological nature, eliminating uncertainty, and experimentation. |
| Technological in Nature | Research that fundamentally relies on principles of physical or biological sciences, engineering, or computer science. |
| Elimination of Uncertainty | Activities intended to discover information to eliminate uncertainty regarding capability, method, or design. |
| Process of Experimentation | A systematic process of evaluating different alternatives to achieve a result where the outcome is uncertain. |
| Permitted Purpose | Research conducted to create or improve the functionality, performance, reliability, or quality of a component. |
| Business Component | A product, process, software, technique, formula, or invention held for sale, lease, or license. |
| Shrinking Back Rule | Applying qualification tests to the smallest component of a project if the whole fails. |
| Direct Conduct of Research | Hands-on participation in experimentation or testing activities by an employee aimed at resolving uncertainty. |
| Directly Supervising Research | Immediate supervision of the research activities and the employees directly performing the experimentation. |
| Directly Supporting Research | Activities such as cleaning, machining, or compiling data that are indispensable to the research process. |
| Qualified Service | Service performing qualified research, directly supervising it, or directly supporting the research activities. |
| Credit Carryover | The amount of tax credit unused in the current year that is saved for future use. |
| Carry Forward Period (Life of Credit) | The specific number of years an unused R&D tax credit remains valid for future tax filings. |
| Nonrefundable Credit | A tax credit that can reduce liability to zero but cannot generate a cash refund. |
| Refundable Credit (Excelsior Program) | A credit type where amounts exceeding tax liability are returned to the taxpayer as cash. |
| Excelsior Jobs Program | New York State economic development initiative offering refundable tax credits for job creation and investment. |
| Excelsior R&D Tax Credit | A specific refundable credit within the Excelsior program for qualified research and development expenditures. |
| Empire State Development (ESD) | The New York State agency responsible for economic development and administering Excelsior tax credits. |
| Certificate of Tax Credit (Excelsior) | Official document issued by ESD certifying a company’s eligibility to claim Excelsior Program credits. |
| Consolidated Funding Application (CFA) | The single application portal used to access multiple New York State funding sources and incentives. |
| Maximum Credit Percentage (6% / 8%) | The statutory percentage caps applied to qualified R&D expenses under the Excelsior Jobs Program. |
| Qualified Green Project | A project focused on sustainability or green technology that qualifies for enhanced tax incentives. |
| Life Sciences Research and Development Tax Credit | A targeted tax credit designed to encourage research and development by life sciences companies. |
| Qualified Life Sciences Company | A business entity engaged in research, development, or manufacturing in biotechnology or medical fields. |
| New Business (Life Sciences) | A recently formed life sciences entity that meets specific criteria to qualify for refundable credits. |
| Fully Refundable (Life Sciences Credit) | Provision allowing eligible small life science companies to receive the entire credit amount as a refund. |
| Credit Cap ($500,000 Annual / $1.5M Lifetime) | The maximum dollar amount of Life Sciences credits a single taxpayer may claim annually or totally. |
| Employees (Fewer Than 10 Rate) | A higher tax credit rate tier available to life sciences companies with fewer than ten employees. |
| Employees (10 or More Rate) | The standard tax credit rate applied to life sciences companies employing ten or more individuals. |
| Form CT-648 | New York State corporation tax form used to claim the Life Sciences Research and Development Tax Credit. |
| Form IT-648 | New York State personal income tax form for claiming the Life Sciences Research and Development Tax Credit. |
| Sales and Use Tax Exemption (R&D) | Tax relief exempting purchases of tangible personal property used for R&D from state sales tax. |
| Research and Development in the Experimental or Laboratory Sense | Definition requiring R&D activities to go beyond routine testing and involve scientific experimentation. |
| Direct and Predominant Use (Sales Tax) | Requirement that equipment must be used more than 50 percent of the time for R&D purposes. |
| Exclusively Used (Utility Exemption) | Strict requirement that utilities must be used 100 percent for R&D to qualify for tax exemption. |
| Tangible Personal Property (R&D Exemption) | Physical machinery, equipment, or supplies purchased specifically for use in research and development activities. |
| Gas, Electricity, Refrigeration, and Steam (Utility Exemption) | Energy sources that are exempt from New York sales tax when used exclusively for research and development. |
