State outline of New York

New York offers two fully refundable state R&D tax credit programs that, paired with the federal credit, can significantly reduce innovation costs for qualifying businesses.

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New York R&D Tax Incentives at a Glance

Excelsior Jobs Program R&D Credit:

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50% of the federal R&D credit attributable to New York State QREs; capped at 6% of NYS research expenditures (8% for qualified green projects or Green CHIPS projects) and 7% cap for semiconductor supply chain projects

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Fully refundable; claimable over a benefit period of up to 10 years

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Requires ESD certification and annual performance reporting; job creation thresholds vary by industry

Life Sciences R&D Tax Credit:

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15% of NYS QREs for companies with 10 or more employees; 20% for companies with fewer than 10 employees

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Fully refundable; capped at $500,000 per year and $1.5 million lifetime; $10 million annual statewide pool

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Available for up to three consecutive years; new life sciences businesses only; contract research expenses excluded

Federal Benefits:

  • Available for all qualifying U.S. research
  • Payroll tax offset option for eligible startups
  • Stackable with both New York state credit

Key Distinction: The two programs are not combinable for the same expenses. Life sciences companies that do not qualify for, or choose not to participate in, the Excelsior program may apply for the Life Sciences credit instead.

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Who Qualifies for New York R&D Tax Credits?

Excelsior Jobs Program

Businesses must operate in a qualifying strategic industry, meet minimum job creation thresholds for that industry, and obtain ESD certification through the Consolidated Funding Application. Annual performance reporting is required to maintain eligibility. Minimum new job requirements range from 5 to 100 depending on industry.

Life Sciences

R&D Tax Credit Businesses must be a new life sciences company certified by ESD with qualified R&D expenses incurred in New York State on or after January 1, 2018. A "new business" is one that has not been a qualified life sciences company in New York for more than five years.

What Research Activities Qualify in New York?

New York follows federal standards under IRC Section 41 for both state programs. Activities must satisfy all four criteria to qualify:

Developing New or Improved Business Components

You are creating or substantially enhancing a product, process, computer software, manufacturing technique, formula, or invention.

Technical Nature Required


Your activities primarily rely on engineering, computer science, physical sciences, biological sciences, or chemistry.

Technological Uncertainty Exists

You face genuine technical questions about capability, methodology, or appropriate design, not just commercial uncertainty about market acceptance.

Process of Experimentation Used

You are systematically evaluating alternatives through modeling, simulation, prototyping, trial-and-error testing, or iterative refinement.

New York-specific note: Only research conducted within New York State qualifies for either state credit. The Life Sciences credit excludes contract research expenses entirely, unlike the federal credit. Multi-state companies must carefully track where research activities and associated costs occur.

 

What Expenses Qualify for R&D Tax Credits in New York?

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Wages and Salaries

Excelsior Program

New York-based employees directly conducting, supervising, or supporting qualified research

 

Life Sciences Credit

New York-based employees directly conducting, supervising, or supporting qualified research

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Supplies

Excelsior Program

Materials consumed during the research process in New York

 

Life Sciences Credit

Materials consumed during the research process in New York

 

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Contract Research

Excelsior Program

Amounts paid to third parties performing qualified research in New York

 

Life Sciences Credit

Not eligible - excluded by statute



Important note: Both programs use the federal IRC Section 41 definition of qualified research expenses, limited to costs incurred within New York State.

Federal R&D Tax Credit for New York Companies

Federal calculation methods

The federal R&D credit is available to New York businesses independently of either state program and applies to qualifying research conducted anywhere in the United States. Both New York state credits are stackable with the federal credit on the same qualifying New York-based expenses, allowing businesses to capture benefits at both levels simultaneously.

The federal credit can be calculated using the Regular Research Credit (RRC) or the Alternative Simplified Credit (ASC), a streamlined three-year average method often preferred by newer claimants. Qualified small businesses can apply the credit against payroll taxes up to $500,000 per year, and businesses should evaluate the Section 280C election, which affects how R&D deductions interact with the federal credit calculation.

R&D Credits for New York Industries

How qualifying research looks across New York's key sectors:

Pharmaceuticals

New compound development, formulation science, delivery mechanisms, or efficacy testing through controlled experimentation.

Scientific Research and Development

Applied and basic research in physical, biological, or computer sciences conducted through systematic experimentation.

Agriculture

New cultivation methods, crop improvement technologies, or agricultural process innovations through technical research.

Life Sciences and Biotechnology

Drug formulation, biologics development, medical device engineering, genomics research, or clinical validation through laboratory experimentation

Software Development

New software architectures, algorithms, cybersecurity platforms, or data systems through iterative development and testing.

Manufacturing

New production processes, automation systems, materials improvements, or product innovations through engineering and systematic testing.

How to Claim New York R&D Tax Credits

Excelsior Jobs Program

Step 1:

Apply Through ESD's Consolidated Funding Application (CFA)

Submit the CFA to the appropriate ESD regional office. The application establishes your benefit period, job and investment commitments, and the credit components for which your business is eligible. Approval results in a formal agreement with ESD.

Step 2:

Meet Job and Investment Thresholds

Credits are earned only after demonstrating compliance with the job creation and investment requirements established in your ESD agreement. Annual performance reporting is required to maintain eligibility and receive the annual certificate of tax credit.

Step 3:

Claim the Credit on Your New York Return

Upon receiving your ESD certificate of tax credit, claim the Excelsior R&D credit on your New York State corporate or personal income tax return. Excess credit is fully refundable.

Life Sciences R&D Tax Credit

Step 1:

Apply to ESD for Certification

Submit a completed application and Excel workbook to Empire State Development at [email protected]. Applications are reviewed on a rolling basis; credits are allocated from the $10 million annual pool on a first-come, first-served basis.

Step 2:

Receive Certificate of Tax Credit

ESD issues a certificate showing the credit amount and the tax year in which it may be claimed. The certificate must be received before claiming the credit on your return.

Step 3:

Claim the Credit on Your New York Return

File Form CT-648 (corporations) or Form IT-648 (all others) with your New York State return. The credit is fully refundable; any amount exceeding your tax liability is paid as a cash refund.

What Records Should You Keep?

Project-Level Descriptions:

Maintain project-level descriptions of each research activity, the technical uncertainties being resolved, and the systematic experimentation process used, with clear evidence that work occurred within New York State.

Payroll Records:

Keep payroll records and time tracking for New York research personnel, geographic allocation records for employees working in multiple states, supply receipts for materials consumed during New York research, and copies of all ESD correspondence, certificates, and annual performance reports.

Create Documentation:

For the Life Sciences credit, retain documentation supporting the IRC Section 41 four-part test for each qualifying project, noting that contract research costs are not eligible and should be excluded from QRE calculations. Create contemporaneous documentation during the research process, and maintain all records through the applicable audit period.

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Estimate Your R&D Tax Credit in Minutes

Find out how much your innovative work could earn back in tax credits. Use our quick calculator to estimate your potential savings — no forms, no hassle.

CALCULATE YOUR CREDIT

Saving Money, Spurring Innovation

Every day, companies nationwide further the mission of innovation with new products, processes and initiatives that change the landscape of how we do business. But innovation takes funding, and with that comes a vicious cycle: You need money to grow your business and develop your products and services… but you also need to do those same things to bring money in.

That’s why R&D tax credits were established. Designed to encourage companies like yours to invest in the innovation, creation and improvement of products or processes, R&D tax credits can offset some of the costs associated with research and development — fueling growth and technological advancement.

Pitfalls New York Companies Should Avoid

Failing to obtain ESD certification before claiming either credit

Neither the Excelsior R&D credit nor the Life Sciences credit can be claimed without a certificate of tax credit issued by Empire State Development. Applying retroactively after filing your return is not permitted.

Treating the two state programs as interchangeable

The Excelsior and Life Sciences programs have different eligibility requirements, credit rates, caps, and application processes. Life sciences companies should evaluate both programs separately and apply to the one that best fits their situation - they cannot double-count the same expenses.

Including contract research in Life Sciences credit calculations

Unlike the federal credit and the Excelsior program, the Life Sciences R&D credit explicitly excludes contract research expenses. Including them overstates the credit and creates audit exposure.

Missing the Life Sciences annual pool allocation

The Life Sciences program allocates credits from a $10 million annual pool on a first-come, first-served basis. Delaying your ESD application risks missing your allocation for the year.

Failing to meet ongoing Excelsior job commitments

Excelsior credits are contingent on maintaining the job creation and investment thresholds in your ESD agreement. Falling below those thresholds in any year can result in credit recapture.

Can You Claim Credits for Previous Years in New York?

New York's state credits require ESD certification before they can be claimed, so prior years cannot be retroactively captured through the state programs. However, the federal R&D credit remains available on amended returns for open tax years within the applicable statute of limitations. Many New York businesses in qualifying industries have significant unclaimed historical federal credits available through amended returns.

A professional review can quantify available federal credits across open years, identify whether your business qualifies for one or both New York state programs, and build the documentation infrastructure needed to support claims going forward.

WA state R&D lookback window

Watch our latest videos to learn more!

Confused about whether you qualify or how the credits work? Our videos break it all down for you.

Claiming the R&D tax credit can provide significant tax savings, but proper documentation is key to ensuring compliance and maximizing your benefits. Without the right records, your claim could be denied or flagged for an IRS audit. In this video, we’ll cover best practices for R&D tax credit documentation, including: ✅ How to maintain detailed project records ✅ Tracking employee time on R&D activities ✅ Organizing financial records of qualifying expenses ✅ Documenting experiment results and decision-making A well-organized documentation system not only supports your R&D credit claim but also improves overall business operations. Don’t wait until tax season—stay prepared year-round! 💡 Need expert guidance? James Moore’s tax professionals can help ensure your records meet IRS standards and maximize your claim. Contact us today! 🔹 Subscribe for more tax-saving strategies! 🔹 Like & share this video to help others optimize their R&D tax credits! #RDTaxCredit #TaxSavings #ResearchAndDevelopment #RDDocumentation #TaxPlanning #IRSCompliance #SmallBusinessTax #StartupFunding #BusinessTaxes #CPAFirm #TaxCredits #BusinessGrowth #TaxTips #FinancialPlanning #IRSRecords #AuditPreparation #JamesMooreCPA #AccountingAdvice #MaximizeTaxCredits #RDFunding #IRS MORE R&D TAX CREDIT SERVICES TOPICS LIKE THIS ONE ************************************************************** 🏥 James Moore R&D Tax Credit Services: https://www.jmco.com/tax/r-and-d-tax-credit-services/ 👩‍⚕️ R&D Tax Credit Services Articles on JMCO.com: https://www.jmco.com/articles/research-and-development-tax-credits/ SOCIALIZE WITH US! *************************************************************** ⁠📹 YouTube: https://www.youtube.com/@JamesMooreAndCo 💼 LinkedIn: https://www.linkedin.com/company/james-moore-and-co 🖒 Facebook: https://www.facebook.com/JamesMooreAndCo 🐦 Twitter: https://twitter.com/JamesMooreAndCo
YouTube Video UExyQlhPa0JKMTM1a1NrRmVaQ1M2Z085a0FpTkpYRlBnNC4xMkVGQjNCMUM1N0RFNEUx
Unlock R&D tax credit savings and reduce your payroll tax liability! Did you know that eligible startups and small businesses can use the R&D tax credit to offset up to $500,000 in payroll taxes annually? If your business isn’t yet profitable, this can be a game-changer—helping you monetize tax credits sooner and improve cash flow. What qualifies? Activities like developing new or improving existing products, processes, or software may be eligible, along with associated costs such as wages, supplies, and contractor expenses. But the election must be made on originally filed tax returns, so timing is critical! At James Moore, we simplify the R&D tax credit process, ensuring you maximize benefits while staying compliant. Don't leave money on the table—reach out today to see how we can help you claim these valuable credits! #RDTaxCredit #PayrollTaxOffset #SmallBusinessTaxSavings #StartupTaxCredits #TaxIncentives #ResearchAndDevelopment #TaxPlanning #BusinessGrowth #StartupFunding #Innovation #TaxDeductions #IRS #AccountingTips #Entrepreneurship #TaxCredits #TaxStrategies #FinancialSuccess #TechStartup #Manufacturing #BusinessTaxPlanning #JamesMooreCPA MORE R&D TAX CREDIT SERVICES TOPICS LIKE THIS ONE ************************************************************** 🏥 James Moore R&D Tax Credit Services: https://www.jmco.com/tax/r-and-d-tax-credit-services/ 👩‍⚕️ R&D Tax Credit Services Articles on JMCO.com: https://www.jmco.com/articles/research-and-development-tax-credits/ SOCIALIZE WITH US! *************************************************************** ⁠📹 YouTube: https://www.youtube.com/@JamesMooreAndCo 💼 LinkedIn: https://www.linkedin.com/company/james-moore-and-co 🖒 Facebook: https://www.facebook.com/JamesMooreAndCo 🐦 Twitter: https://twitter.com/JamesMooreAndCo
YouTube Video UExyQlhPa0JKMTM1a1NrRmVaQ1M2Z085a0FpTkpYRlBnNC4wOTA3OTZBNzVEMTUzOTMy
Join R&D tax credit expert Lucia Valenzuela as she breaks down some of the biggest myths surrounding the R&D tax credit! Many believe it’s only for large corporations or tech giants, but in reality, businesses of all sizes and across various industries—like agriculture, manufacturing, and food & beverage—can qualify. Think you need a dedicated R&D department? Think again! Lucia explains why even smaller teams, including engineers and developers, often qualify for this valuable credit. And if you’re concerned about the complexity or IRS audits, she’s here to clear up the confusion and show you how, with the right guidance, claiming these credits can be straightforward. At James Moore, we make the R&D tax credit process simple, ensuring you maximize the benefits you’re entitled to. Don’t miss out on potential savings—let’s talk about how we can help! MORE R&D TAX CREDIT SERVICES TOPICS LIKE THIS ONE ************************************************************** 🏥 James Moore R&D Tax Credit Services: https://www.jmco.com/tax/r-and-d-tax-credit-services/ 👩‍⚕️ R&D Tax Credit Services Articles on JMCO.com: https://www.jmco.com/articles/research-and-development-tax-credits/ SOCIALIZE WITH US! *************************************************************** ⁠📹 YouTube: https://www.youtube.com/@JamesMooreAndCo 💼 LinkedIn: https://www.linkedin.com/company/james-moore-and-co 🖒 Facebook: https://www.facebook.com/JamesMooreAndCo 🐦 Twitter: https://twitter.com/JamesMooreAndCo
YouTube Video UExyQlhPa0JKMTM1a1NrRmVaQ1M2Z085a0FpTkpYRlBnNC41MjE1MkI0OTQ2QzJGNzNG
Unlock significant tax savings for your business with the R&D Tax Credit! 💰 Many business owners aren’t aware they may qualify for this valuable federal incentive, which is designed to encourage innovation. Whether you’re developing new products, processes, or software, the R&D tax credit offers a dollar-for-dollar reduction on eligible expenses, such as wages, supplies, and certain contract research costs. But how do you know if your activities qualify? The IRS uses a four-part test: 1. Permitted Purpose – Your project should improve or create a product, process, or technique. 2. Elimination of Uncertainty – Your work must tackle technical uncertainties. 3. Process of Experimentation – Testing and trial methods should be part of your process. 4. Technological in Nature – The project must rely on scientific principles, like engineering. From software companies optimizing applications to startups experimenting with autonomous technology, the R&D credit can support your innovative efforts—even if these innovations are new only to your business! Curious if you qualify? Contact James Moore’s R&D tax specialists today to see how we can help you document your efforts and maximize your credit. MORE R&D TAX CREDIT SERVICES TOPICS LIKE THIS ONE ************************************************************** 🏥 James Moore R&D Tax Credit Services: https://www.jmco.com/tax/r-and-d-tax-credit-services/ 👩‍⚕️ R&D Tax Credit Services Articles on JMCO.com: https://www.jmco.com/articles/research-and-development-tax-credits/ SOCIALIZE WITH US! *************************************************************** ⁠📹 YouTube: https://www.youtube.com/@JamesMooreAndCo 💼 LinkedIn: https://www.linkedin.com/company/james-moore-and-co 🖒 Facebook: https://www.facebook.com/JamesMooreAndCo 🐦 Twitter: https://twitter.com/JamesMooreAndCo
YouTube Video UExyQlhPa0JKMTM1a1NrRmVaQ1M2Z085a0FpTkpYRlBnNC4wMTcyMDhGQUE4NTIzM0Y5
Licensed tax attorney and Chief Innovation Officer Lucia Valenzuela explains how your business can benefit from valuable R&D tax credits. These government incentives reward innovation, helping you reinvest in your company's growth through product development, process improvements and more. With years of experience and a proven track record, Lucia and the James Moore team are here to simplify the process and maximize your credits. Discover how you can unlock these benefits and fuel your company's future! MORE R&D TAX CREDIT SERVICES TOPICS LIKE THIS ONE ************************************************************** 🏥 James Moore R&D Tax Credit Services: https://www.jmco.com/tax/r-and-d-tax-credit-services/ 👩‍⚕️ R&D Tax Credit Services Articles on JMCO.com: https://www.jmco.com/articles/research-and-development-tax-credits/ SOCIALIZE WITH US! *************************************************************** ⁠📹 YouTube: https://www.youtube.com/@JamesMooreAndCo 💼 LinkedIn: https://www.linkedin.com/company/james-moore-and-co 🖒 Facebook: https://www.facebook.com/JamesMooreAndCo 🐦 Twitter: https://twitter.com/JamesMooreAndCo
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Ready to Maximize Your New York R&D Tax Credits?

New York's fully refundable state R&D credits make the state one of the most rewarding environments for research-driven businesses - but both programs require advance planning and ESD certification before credits can be claimed. Whether you are evaluating the Excelsior program, applying for the Life Sciences credit, or working to maximize your federal credit alongside New York benefits, our team provides the expertise to help you build a complete, defensible credit strategy.

New York R&D Tax Credit FAQ

Which New York state R&D credit program is right for my business?

The Excelsior Jobs Program is the better fit for established and growing businesses across a wide range of strategic industries that are actively creating jobs in New York. The Life Sciences credit is designed specifically for newer life sciences companies and offers higher credit rates (15-20% vs. 6%), but is limited to three consecutive years and excludes contract research. Life sciences companies should model both programs before applying.

Are New York's R&D credits refundable?
Can I claim both New York state credits and the federal R&D credit?
What is the ESD certificate of tax credit and how do I get it?
My business is a startup with no taxable income. Can we still benefit?

Access the latest New York R&D tax credit information and filing requirements:

Empire State Development - Excelsior Jobs Program

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ESD - Life Sciences Tax Credit Program

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NYS Department of Taxation - Excelsior Credit

View Guidance

NYS Department of Taxation - Life Sciences Credit

View Guidance

IRC Section 41


View Statute

IRS Form 6765

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Lucia Valenzuela

Chief Innovation Officer (CInO)

Lucia is the driving force behind the adoption of new technologies and services at our firm. She stays up to date on advancements and works with firm leadership to develop and implement strategic plans that align with our goal of enhancing the client and employee experience.

Lucia brings to James Moore a decade of experience and forward-thinking leadership in technology, public accounting and tax law matters. A trusted advisor in the field of R&D tax credits, she has successfully guided thousands of companies through the complexities of filing for that credit. Her other notable achievements include the market launch of revolutionary tax software and building a large specialty tax practice at a top 50 accounting firm.

Lucia’s knowledge of technology, strategic partnerships, teambuilding, public accounting and tax law provides our firm with a new and unique perspective on client service and operations. Outside of James Moore, Lucia is active in local bar associations and their respective boards. She also volunteers with Project Youth, Step-Up and other organizations focused on mentoring and empowering underprivileged youth in their journeys toward college.

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Kris Hutchins, CPA

Client Service Director

This information serves general educational purposes and does not constitute tax, legal, or accounting advice. New York's R&D credit programs, including credit rates, program caps, eligibility requirements, and application procedures, are subject to change by the New York State Legislature and Empire State Development. Life Sciences credit availability reflects current program parameters through 2027; eligibility periods and annual pool availability may be updated by the Legislature. Federal R&D credit information reflects law as of February 2026. Consult qualified tax professionals before making decisions based on this information.

Last Updated: February 2026
Next Review: Quarterly or upon state or federal legislative or administrative changes