Key Takeaways

  • NYS imposes a fixed dollar minimum tax on S corporations based on gross receipts, even if they owe no income tax.
  • The NYS S Corp minimum tax for 2024 ranges from $25 to $4,500, depending on the corporation’s gross receipts and location.
  • S corporations doing business in New York City must also pay a separate General Corporation Tax, which includes its own minimum tax structure.
  • Franchise taxes are based on the highest of four calculations: business income, capital, fixed dollar minimum, or a separate minimum taxable income formula.
  • Foreign S corporations are subject to tax if they are actively doing business in NY, even if not formally registered in the state.
  • NYS S corps must also file Form CT-3-S to report tax due, including any minimum tax owed.

NYS franchise tax is a government levy charged by New York State to certain types of businesses, including corporations. Businesses are subject to the state's franchise tax if they engage in certain types of activities regardless of whether they are registered to do business in New York.

The Pros and Cons of Owning a Business in New York

New York offers plenty of benefits for small-business owners. For starters, New York City is the center of the world economy, and all the most powerful economic engines are based in NYC. New York is also home to prestigious universities that send graduates into the business world every spring, giving you access to the best and brightest.

New York attracts all types of businesses, both foreign and domestic. While the state offers numerous benefits to business owners, there are a few negatives to consider.

For starters, New York's business tax code is costly and difficult to navigate. You may need to calculate taxes using several methods depending on the nature of your business. The state also requires you to use the tax method resulting in the highest tax bill. The most expensive tax treatment is reserved for C corporations, but even small businesses are subjected to intense taxation.

New York Taxes

Companies that operate in New York must comply with several different types of taxes with specific requirements reserved for their particular business activities. New York imposes a corporate income tax on both types of corporations, not to mention a tax on foreign and domestic companies that exercise their corporate franchise.

New York also taxes companies for:

  • Doing business
  • Employing capital
  • Maintaining an office in New York
  • Owning or leasing property

New York business owners are free to choose their preferred business structure, whether they prefer a limited liability company (LLC), partnership, sole proprietorship, S corporation, or C corporation. Keep in mind, however, that the business structure you choose determines how much you'll pay in taxes and fees, which will affect your business income.

New York Franchise Tax

Some small business transition to C corporations after expanding. While a corporation franchise tax is standard in most states, New York's franchise tax is more complex. The state wants to close loopholes that allow businesses to minimize their taxes, which is why the state imposes four different ways of calculating tax. Each method is calculated in a different way, and you must calculate taxes using each method and pay the highest amount of the four results. These four amounts are:

  • The company's entire net income
  • The company's minimum taxable income
  • The company's business and investment capital
  • A fixed dollar minimum tax

The easiest method is calculating tax based on net income, which equals the federal taxable income. A company's investment capital (minus any liabilities) may also be taxed. Another method is the minimum taxable income, calculated from net income plus some federal adjustments. Finally, the fixed dollar minimum method taxes companies on gross receipts, and charges set tiers a flat dollar amount.

New York corporate income tax is sometimes called a franchise tax. The state's corporation franchise tax applies to both types of corporations and a “filing fee” tax which applies to LLCs, partnerships, and limited liability partnerships (LLPs). If you receive income from your business, that income is also taxed on your individual New York tax return.

Foreign corporations are not subject to New York tax if they only engage in interstate commerce.

NYS S Corp Minimum Tax 2024

For the 2024 tax year, New York S corporations are required to pay a franchise tax to the state, even if they have little or no income. This includes a Fixed Dollar Minimum Tax (FDMT), which is based on the corporation’s New York gross receipts. The FDMT ensures that all corporations contribute a baseline amount toward state revenue, regardless of profitability.

The FDMT rates for New York S corporations in 2024 are as follows:

NYS Gross Receipts Minimum Tax (Outside NYC) Minimum Tax (Doing Business in NYC)
Not more than $100,000 $25 $100
$100,001 – $250,000 $75 $375
$250,001 – $500,000 $175 $500
$500,001 – $1,000,000 $300 $1,500
$1,000,001 – $5,000,000 $1,000 $3,000
Over $5,000,000 $1,500 $4,500

The NYS S Corp minimum tax 2024 applies regardless of whether the corporation earns a profit, as long as it meets the state’s nexus thresholds for taxation, including having employees, property, or substantial sales in New York.

S corporations that operate in New York City must also file and pay the NYC General Corporation Tax (GCT), which has its own minimum tax rates, as shown in the table above under "Doing Business in NYC."

Additional Considerations:

  • Foreign S Corporations that conduct business in New York, even if not formally registered, are typically subject to NYS franchise tax.
  • Form CT-3-S must be filed annually by S corporations to report income and tax liability to New York State.
  • S corporations with multiple locations or operations in various states may need to apportion income to determine their NYS tax base.

What is Income Tax?

Corporations in the United States use income tax return forms to report:

  • Income
  • Gains
  • Losses
  • Credits
  • Deductions
  • Income tax liability

Foreign subsidiaries, shareholders and assets, including foreign bank accounts, must also be reported. Partnerships can file a K-1 schedule with the Internal Revenue Service to report a partner's income, credits, and deductions. New York State and New York City tax filings are required in addition to federal filings.

Tax rates for both personal income and corporate income vary among states. Most tax rates are flat regardless of income, but four states (Washington, South Dakota, Nevada, and Wyoming) currently do not have a corporate income tax. Individuals in Tennessee and New Hampshire are only taxed on dividend income and interest.

How NYS S Corp Franchise Tax Is Calculated

New York uses four tax calculation methods for corporations, including S corporations. While most S corporations end up paying only the Fixed Dollar Minimum Tax, it’s important to understand all the potential calculation methods, as New York requires corporations to compute their tax liability under each method and pay the highest amount.

  1. Entire Net Income Base – Based on the corporation’s federal taxable income, with New York-specific adjustments.
  2. Business and Investment Capital Base – A percentage of the corporation's investment and business capital, net of liabilities.
  3. Fixed Dollar Minimum Tax Base – A flat dollar amount based on New York gross receipts (outlined in the table above).
  4. Minimum Taxable Income Base – Applies to certain corporations and includes additional federal adjustments beyond net income.

S corporations typically are not taxed at the entity level for income, but New York’s franchise tax structure creates exceptions through these alternative bases.

Frequently Asked Questions

  1. What is the NYS S Corp minimum tax for 2024?
    It ranges from $25 to $1,500 for corporations outside NYC, and from $100 to $4,500 for those doing business within NYC, depending on gross receipts.
  2. Do S corporations in New York City pay additional taxes?
    Yes. S corporations conducting business in NYC must pay the NYC General Corporation Tax, which includes its own minimum tax obligations.
  3. Is the NYS S Corp minimum tax required if my company had no income?
    Yes. The Fixed Dollar Minimum Tax applies regardless of whether the S corp earned income.
  4. What form do I use to file NYS S Corp taxes?
    S corporations must file Form CT-3-S with the New York State Department of Taxation and Finance.
  5. Are foreign S corporations required to pay NYS franchise tax?
    Yes, if they are conducting business in New York, even if they are not registered with the state.

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