New York State taxes corporations under the corporate franchise tax (Article 9-A) at a base rate of 6.5% on business income, with small businesses qualifying for rates as low as 0%. Pass-through entities (LLCs, partnerships, S-Corps) can elect into the PTET to get a state-level tax deduction that bypasses the federal $10,000 SALT cap. NYC adds the Unincorporated Business Tax (4% on net income over $95,000) for sole props, partnerships, and LLCs. The MCTMT hits employers in the metro area at 0.34%. Filing deadlines are March 15 for pass-throughs and April 15 for C-Corps.
This is a lot. If you're running a New York business and want someone to manage this for you, book a free discovery call.
- NYS Corporate Franchise Tax (Article 9-A)
- Pass-Through Entity Tax (PTET) Election
- MCTMT: Metropolitan Commuter Transportation Mobility Tax
- NYC Unincorporated Business Tax (UBT)
- NYC General Corporation Tax & Business Corporation Tax
- NYS vs NYC: Understanding the Double Layer
- Filing Deadlines, Extensions, and Estimated Taxes
- New York Sales Tax Basics
- Worked Examples: Real New York Businesses
- Why New York Businesses Need a Fractional CFO
1. NYS Corporate Franchise Tax (Article 9-A)
Every corporation doing business, employing capital, owning or leasing property, or maintaining an office in New York State must file under Article 9-A. This is New York's primary corporate tax — analogous to a state income tax for business entities.
New York calculates the franchise tax under three bases and you pay the highest of the three (subject to the fixed dollar minimum):
| Tax Base | Rate | Notes |
|---|---|---|
| Business Income Base | 6.5% | Most common — taxable income apportioned to NY |
| Business Income Base (small business) | 0% – 4.875% | Graduated rates for income under $390K |
| Capital Base | 0.1875% | Total business capital allocated to NY (max $5M tax, sunsets 2027) |
| Fixed Dollar Minimum | $25 – $200,000 | Based on NY receipts — see table below |
Fixed Dollar Minimum Tax Schedule
| NY Receipts | Minimum Tax |
|---|---|
| Under $100,000 | $25 |
| $100,000 – $249,999 | $75 |
| $250,000 – $499,999 | $175 |
| $500,000 – $999,999 | $500 |
| $1M – $4,999,999 | $1,500 |
| $5M – $24,999,999 | $3,500 |
| $25M – $49,999,999 | $5,000 |
| $50M – $99,999,999 | $10,000 |
| $100M – $249,999,999 | $20,000 |
| $250M+ | $200,000 |
If your business income is under $390,000 and your NY receipts are under $1M, you qualify for reduced rates: 0% on the first $25,000, then graduated rates up to 4.875%. This can significantly reduce the tax burden for small New York businesses. The qualification is based on the entity's income, not the owner's.
2. Pass-Through Entity Tax (PTET) Election
The New York PTET is one of the most valuable tax planning tools available to pass-through entity owners in 2026. It was created as a workaround to the federal $10,000 SALT deduction cap — and it works.
How the PTET Works
Instead of the business income flowing through to your personal return (where state tax deductions are capped at $10,000), the entity itself pays the state tax. The entity gets a full deduction on its federal return, and you get a credit on your personal NY return for the tax paid. Net result: you effectively deduct your full NY state tax at the federal level.
| PTET Rate | Taxable Income |
|---|---|
| 6.85% | Up to $2,155,350 |
| 9.65% | $2,155,350 – $5,000,000 |
| 10.30% | $5,000,000 – $25,000,000 |
| 10.90% | Over $25,000,000 |
A New York LLC with $500K of taxable income and two equal partners. Without PTET, each partner deducts only $10,000 of state taxes on their federal return (SALT cap). With PTET, the LLC pays ~$34,250 in PTET, deducts it at the entity level, and each partner gets a $17,125 credit on their NY personal return. Federal tax savings at 37% marginal rate: ~$12,673. That's real money — just from making an election.
The PTET election must be made by March 15 of the tax year. This is not retroactive — you cannot elect into PTET after the deadline. Miss it and you lose the SALT cap workaround for the entire year. We set calendar reminders for every client on January 15 and February 15 to ensure this election is never missed.
Who Should Elect PTET
- Any NY pass-through entity where the owners' individual SALT deductions are already capped at $10,000
- Multi-member LLCs, partnerships, and S-Corps — single-member LLCs that are disregarded entities cannot elect PTET directly
- High-income owners — the benefit increases with marginal tax rate
Is your business making the PTET election? If not, you could be leaving thousands on the table. We'll run the numbers.
Book a Free Discovery Call →3. MCTMT: Metropolitan Commuter Transportation Mobility Tax
The MCTMT is a payroll tax imposed on employers and self-employed individuals in the Metropolitan Commuter Transportation District (MCTD) — which covers NYC (all 5 boroughs), Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester counties.
| Category | Rate | Threshold |
|---|---|---|
| Employers (payroll over $312,500/quarter) | 0.34% | Quarterly payroll in MCTD |
| Employers (payroll $312,500 or under) | 0.11% – 0.23% | Graduated rates |
| Self-employed (net earnings over $50,000) | 0.34% | Net earnings from self-employment allocated to MCTD |
Employers file MCTMT quarterly with the NYS Department of Taxation and Finance (Form MTA-305). Self-employed individuals report on their personal income tax return. The MCTMT rate was increased to 0.34% effective July 1, 2023 for employers with payroll over $312,500/quarter. Many payroll providers handle this automatically — but verify yours does.
4. NYC Unincorporated Business Tax (UBT)
If you operate an unincorporated business in New York City — meaning a sole proprietorship, partnership, or LLC not taxed as a corporation — you're subject to the NYC Unincorporated Business Tax at 4% of net income over $95,000.
UBT Key Details
| Detail | Specification |
|---|---|
| Tax Rate | 4% of taxable income |
| Exemption | First $95,000 of unincorporated business taxable income |
| Credit | Up to $3,400 for taxable income between $95,001 – $150,000 |
| Who Pays | Sole proprietors, partnerships, LLCs (not taxed as corps) operating in NYC |
| Filing | NYC-202 (individuals) or NYC-204 (partnerships) |
| Due Date | April 15 (individuals), March 15 (partnerships) |
NYC business owners face triple taxation on business income: federal income tax + NYS income tax + NYC UBT. For a partnership earning $500K, the UBT alone is roughly $16,200 ($500K – $95K = $405K × 4%). That's on top of the ~$30K+ in state personal income tax. This is a major reason some businesses incorporate or elect S-Corp status — to convert UBT liability into a corporate tax obligation that may be lower.
5. NYC General Corporation Tax & Business Corporation Tax
Corporations doing business in New York City face an additional city-level tax on top of the NYS franchise tax:
| Tax | Rate | Applies To |
|---|---|---|
| NYC Business Corporation Tax | 8.85% of allocated net income | C-Corporations doing business in NYC |
| NYC Business Corporation Tax (small business) | 6.5% – 8.85% | Graduated rates for income under ~$1M |
| S-Corp NYC Tax | 8.85% on NYC portion | S-Corps with NYC nexus (yes, NYC taxes S-Corps) |
Most states and cities ignore S-Corp status and let income pass through to shareholders. NYC does not. NYC imposes an entity-level tax on S-Corporations at the same 8.85% rate as C-Corps. This is a unique and often unexpected burden for S-Corp owners operating in New York City.
6. NYS vs NYC: Understanding the Double Layer
One of the most confusing aspects of New York business taxes is the two-tier system. Here's how the taxes stack for different entity types:
| Entity Type | NYS Tax | NYC Tax | Combined Rate (Approx.) |
|---|---|---|---|
| C-Corporation | 6.5% franchise tax | 8.85% BCT | ~15.35% |
| S-Corporation | Pass-through (or PTET) | 8.85% BCT (entity-level) | 8.85% + personal rate |
| LLC/Partnership | Pass-through (or PTET) | 4% UBT | 4% + personal rate |
| Sole Proprietor | Personal income tax | 4% UBT + personal | ~14–17% combined |
Scenario: $400K net income, 100% allocated to NYC
As C-Corp: NYS franchise tax: $26,000 (6.5%) + NYC BCT: $35,400 (8.85%) + Federal: $84,000 (21%) = $145,400 total entity-level tax
As LLC: NYC UBT: $12,200 (4% × $305K) + pass-through to owners for NYS and federal personal tax. Effective rate depends on owner's total income, but often lower total tax due to pass-through character + PTET election.
Takeaway: Entity structure in NYC has massive tax implications. This analysis should be revisited annually.
7. Filing Deadlines, Extensions, and Estimated Taxes
| Filing | Due Date (Calendar Year) | Extension |
|---|---|---|
| NYS Corporate Franchise Tax (CT-3/CT-4) | April 15 | 6 months (to October 15) |
| NYS Partnership Return (IT-204) | March 15 | 6 months (to September 15) |
| NYS S-Corp Return (CT-3-S) | March 15 | 6 months (to September 15) |
| PTET Election | March 15 | No extension — irrevocable once made |
| PTET Estimated Payments | March 15, June 15, Sept 15, Dec 15 | No extension |
| NYC UBT (NYC-202/204) | April 15 / March 15 | 6 months |
| NYC BCT (NYC-2/2A) | April 15 | 6 months |
| MCTMT (quarterly) | Last day of month after quarter | No extension |
| NYS Estimated Tax (CT-400) | March 15, June 15, Sept 15, Dec 15 | No extension |
| NYS Sales Tax | Quarterly: Mar 20, Jun 20, Sep 20, Dec 20 | No extension |
March 15 is the single most important date for New York pass-through entities. It's when partnership returns, S-Corp returns, PTET elections, AND the first quarterly PTET estimated payment are all due simultaneously. Miss any one of these and you face penalties or lose the PTET election entirely. A fractional CFO builds your compliance calendar around this date months in advance.
8. New York Sales Tax Basics
New York's state sales tax rate is 4%, with local jurisdictions adding up to 4.875% on top. NYC's combined rate is 8.875%. Economic nexus threshold: $500,000 in NY sales AND more than 100 transactions in the preceding four quarters.
Notable Exemptions
- SaaS and cloud services: Generally taxable in New York (unlike California)
- Clothing and footwear under $110: Exempt from state tax and NYC tax
- Food for home consumption: Exempt from state and local sales tax
- Manufacturing equipment: Exempt from state and local sales tax
New York taxes SaaS as tangible personal property. If you sell software as a service to New York customers, you likely owe sales tax. This catches many tech companies off guard, especially those relocating from states like California where SaaS is exempt. Audit exposure on uncollected SaaS sales tax can be significant.
9. Worked Examples: Real New York Businesses
Entity: Two-partner LLC, consulting, 100% NYC income
Net income: $600,000
NYC UBT: ($600K – $95K) × 4% = $20,200
MCTMT: 0.34% × self-employment earnings ≈ $2,040
With PTET election: ~$41,100 entity-level PTET, fully deductible federally
Federal savings from PTET: ~$15,200 (at 37% marginal rate)
Bottom line: Without PTET, this partnership would lose ~$15K/year to the SALT cap. The election costs nothing to make but requires planning.
Entity: S-Corporation, e-commerce, NYC nexus
Net income: $300,000
NYS franchise tax: Fixed minimum based on receipts (likely $1,500)
NYC BCT: 8.85% × $300K allocated to NYC = $26,550
PTET available? Yes — S-Corps can elect NYS PTET
Surprise: Many S-Corp owners don't realize NYC taxes their S-Corp at the entity level. That $26,550 is often an unwelcome discovery at tax time. A fractional CFO models this in advance.
10. Why New York Businesses Need a Fractional CFO
New York's multi-layered tax system creates more compliance obligations — and more optimization opportunities — than almost any other state. A fractional CFO manages:
- PTET election and estimated payments — the single most impactful tax planning decision for NY pass-throughs
- Entity structure optimization — LLC vs S-Corp vs C-Corp analysis considering both NYS and NYC taxes
- Quarterly estimated tax compliance — NYS, NYC, and MCTMT all have separate quarterly obligations
- Nexus monitoring — as your business grows, NYC allocation percentages and economic nexus thresholds shift
- The March 15 crunch — coordinating returns, elections, and payments that all converge on one date
- Monthly close and cash flow planning — timing tax payments across 4+ taxing authorities requires precision
At BlackpeakCFO, we manage the complete financial calendar for New York businesses: PTET elections filed by March 1 (two weeks early), quarterly estimated taxes across NYS, NYC, and MCTMT, entity structure reviews annually, and monthly management accounts that track your effective tax rate across all jurisdictions. We've never had a client miss the PTET deadline.