Key figures
New York accounting
2026, with sources
Three layers of corporate tax
New York taxes a corporation under Article 9-A of the Tax Law as a franchise tax, not a plain income tax. Each year the company computes three bases and pays the highest: the business income base at 6.5% (7.25% on the whole base once it passes $5 million, a rate the fiscal 2027 budget extended through 2029), the business capital base at 0.1875% (0% for a small business taxpayer), and a fixed dollar minimum that runs from $25 to $200,000 depending on New York receipts.
On top of that sit two layers founders in other states never see. A company with activity in the commuter district around New York City (the five boroughs plus Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester) files Form CT-3-M and pays a surcharge of 30% of the state tax apportioned to that district. A company doing business in the city itself also owes the NYC Business Corporation Tax, a separate return to a separate agency at 8.85%, with its own fixed dollar minimum and its own capital base at 0.15%.
The tax department puts the top combined state-and-MTA rate at 9.43% for 2026. Add the city and a Manhattan company’s marginal rate on New York income is well above that, which is why the state tax line in a New York startup’s provision is rarely small once it turns profitable.
- New York State franchise tax (Article 9-A, Form CT-3): the highest of business income, capital or the fixed dollar minimum.
- MTA surcharge (Form CT-3-M): 30% of the state tax apportioned to the Metropolitan Commuter Transportation District.
- NYC Business Corporation Tax (Form NYC-2): 8.85% for most corporations, filed with the NYC Department of Finance.
Apportionment and combined reporting
Both the state and the city apportion with a single receipts factor and customer-based sourcing: receipts from services and digital products go to where the customer is, not where the engineers sit. A Brooklyn company selling software to customers in forty states apportions only its New York customers’ share to New York. The city follows the same model; its single receipts factor has been fully effective since 2018.
Article 9-A requires a combined report for corporations that meet its ownership and unitary-business tests, so a parent with a New York operating subsidiary generally files one CT-3-A for the group rather than separate returns. The city has a parallel combined return, Form NYC-2A.
What it means for the books
New York starts from federal taxable income, then modifies it. The modifications that matter most in 2026 come from Notice N-26-1: New York decoupled from the federal deduction for research and experimental expenditures under §§ 174 and 174A and from accelerated depreciation for qualified production property under § 168(n), for tax years beginning on or after January 1, 2025. Domestic R&E paid or incurred from 2025 is amortized over 60 months for state purposes; earlier amounts keep amortizing under the rules in effect on January 1, 2022. Depreciation adjustments run through Form CT-399.
In practice: a startup that expenses $1.2 million of developer payroll federally in 2026 deducts only a fraction of it in New York that year, and carries the rest as a state-only temporary difference. Net operating losses can be carried back three years and forward 20 against the business income base, but they cannot push the tax below the fixed dollar minimum. Each of these is a line in the state tax provision a Series A auditor will ask to see reconciled.
Deadlines
- 15th day of the 4th month (Apr 15 for calendar years)New York State franchise tax returnForm CT-3 (and CT-3-M if in the MCTD)
- Apr 15 for calendar yearsNYC Business Corporation Tax returnForm NYC-2
- By the original due dateSix-month extensions; the tax is still due on the original dateForm CT-5 / NYC-EXT
The federal baseline
This page covers what New York adds. The federal rules underneath it apply here too.
Common questions
How many corporate returns does a startup in New York City file?
Usually two, sometimes three. New York State’s Form CT-3 is the franchise tax; if you have activity in the twelve-county commuter district, Form CT-3-M adds the MTA surcharge; and if you do business in the five boroughs, NYC’s Business Corporation Tax is a separate return (Form NYC-2) to a separate agency, the NYC Department of Finance.
Can we deduct R&D costs immediately in New York, as we now can federally?
No. Under Notice N-26-1, New York adds back the federal deduction for research and experimental expenditures and lets you amortize expenditures paid or incurred from January 1, 2025 over 60 months. NYC decoupled too, on its own method. So a SaaS company that expenses engineering salaries federally still has a New York deferred item to track.
Does a pre-revenue startup owe New York franchise tax?
Not if it has a loss and small receipts. A loss-making C-corp pays the highest of three bases: business income (zero), capital (0% for a small business taxpayer) or the fixed dollar minimum, which starts at $25 for New York receipts of $100,000 or less.
Accounting next door
- CTConnecticut accountingConnecticut taxes corporations at 7.5% of apportioned income, with a 10% surtax that reaches every combined group, a $250 minimum and an NOL cap at half of income.
- MAMassachusetts accountingMassachusetts taxes corporations at 8% of apportioned income plus $2.60 per $1,000 of property or net worth, with a $456 minimum. From 2025 apportionment is by sales only.
- NJNew Jersey accountingNew Jersey’s Corporation Business Tax is 9% on income over $100,000, plus a 2.5% Corporate Transit Fee above $10 million, with mandatory combined reporting and market-based sourcing. Every filer pays a minimum tax of at least $500, and NOL deductions are capped at $1 million a year through mid-2030.
- PAPennsylvania accountingPennsylvania’s corporate net income tax is 7.49% for 2026 and falling, on separate-company returns with market-sourced services. Losses are capped as a share of income, and federal R&D expensing and bonus depreciation don’t carry through.
- VTVermont accountingVermont taxes corporations at 6%, 7% and 8.5%, with a minimum tax of $100 to $100,000 set by Vermont gross receipts. Apportionment is sales-only and NOLs carry forward 10 years.
Founder guides on this
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- FundraisingAudit-ready books before your Series AInvestors, lenders and auditors ask for the same things: accrual statements, reconciled accounts and support for every balance. How to be ready first.
- US GAAPUS GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
- The closeWhy startups should close their books every monthA monthly close turns a bank balance into numbers an investor, an auditor or a 409A firm will accept. What it is, and why it gets expensive to skip.
More of the New York guide
- ReceivablesReceivables and sales tax in New YorkSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in New YorkPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in New YorkWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in New YorkRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in New YorkCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- NYS Department of Taxation and Finance — Form CT-3-I instructions (2025)
- NYS Department of Taxation and Finance — Corporate taxes (tax facts)
- NYC Department of Finance — Business Corporation Tax
- NYS Department of Taxation and Finance — Form CT-3.4-I, Net Operating Loss Deduction (2025)
- NYS Department of Taxation and Finance — Notice N-26-1 (IRC §§ 168(n), 174 and 174A decoupling)
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.