The R&D Tax Credit is back! Find out how the Big Beautiful Bill Act can fund your R&D. Learn More
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New York offers several research and development tax incentives that can significantly reduce a company’s state tax burden. One of the most notable is the New York State Qualified Emerging Technology Company (QETC) Facilities, Operations, and Training Credit, which includes an R&D component for businesses engaged in qualified research within the state.
The R&D portion of the credit generally equals 9% of qualified research expenses (QREs) conducted in New York State, calculated in a manner similar to the federal credit under IRC §41, but limited to costs incurred within the state. Qualifying expenses often include wages for in-state R&D employees, supplies used in research, and 65% of contractor costs for research performed in New York.
To claim the credit, eligible taxpayers must file Form CT-604, Claim for QETC Facilities, Operations, and Training Credit, along with their New York State corporate franchise tax return (Form CT-3 or CT-3-S). Unused credits may be carried forward for up to 15 years, and in some cases, refundable amounts may be available to certain small businesses.
📄 New York State Department of Taxation and Finance – QETC Credit Overview
📄 Form CT-604 + Instructions (PDF)
It’s important to note that the New York credit is separate from the federal R&D credit and has its own eligibility rules, recordkeeping requirements, and calculation methods. Companies should carefully track in-state research costs and maintain clear documentation to support their claim. Strategic planning can help determine whether to maximize federal, state, or both credits in a given tax year — and our team can help you model and document the most advantageous approach.
Starting in tax year 2025, businesses can now immediately deduct domestic R&D expenses in the year they occur instead of spreading deductions over five years. The bill also offers refund opportunities for small businesses and faster deduction schedules for larger companies.
If your business has $31 million or less in annual gross receipts, you may be able to:
File amended returns for 2022–2024 to get cash refunds for previously capitalized R&D costs
Deduct remaining unamortized R&D expenses faster starting in 2025
Apply your R&D credit against payroll taxes—up to $500,000 per year for qualifying startups
Yes. Eligible small businesses can retroactively deduct R&D costs from 2022–2024 and claim refunds. Even larger companies can accelerate the deduction of past R&D costs over one or two years starting in 2025.
No. The 15-year amortization rule for foreign R&D remains in place. The new immediate expensing option only applies to U.S.-based research and development.
Savings vary, but many businesses may recover hundreds of thousands of dollars through a combination of:
Full expensing of domestic R&D costs
Retroactive refunds for 2022–2024
Annual R&D tax credits (often worth 5–10% of qualifying expenses)
Startups with less than $5 million in annual revenue can use the R&D credit to offset payroll taxes—up to $500,000 per year—resulting in quarterly cash refunds, even without taxable income.
Work with our expert team at TaxTaker. We help innovative companies like yours identify, document, and claim the maximum R&D tax credit available—while ensuring you stay fully compliant with IRS requirements. Our team specializes in both federal and state R&D tax credits, and we know how to uncover hidden value by reviewing past filings for potential refund opportunities. With the new 2025 rules in place, we’ll build a tailored strategy that maximizes your savings now and in the years ahead. That’s why businesses across the country trust TaxTaker to deliver results they can count on.
Working with TaxTaker is risk free. TaxTaker collects a success fee only if you qualify for a tax credit.
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