New York City Enacts Economic Nexus for Corporate Income Tax and Moves Up PTE Effective Date

September 28, 2022

By: Jeff Glickman, SALT Partner

At a glance

  • The main takeaway: Recent legislation amended New York City’s tax code to establish an economic nexus threshold for its income tax on corporations and moved up the applicable year for pass-through entity elections to 2022.
  • Assess the impact: The amendments to the New York City Business Corporation Tax and pass-through entity tax election could have a significant impact on your business.
  • Take the next step: Aprio’s State and Local Tax (SALT) team can assist your business with determining your filing requirements and discuss how you could benefit from a pass-through entity tax election.

Schedule a free consultation today to learn more!

The full story:

On August 31, 2022, New York Governor Kathy Hochul signed SB 9454, which made two significant changes to New York City’s tax code, as summarized below.

Business Corporation Tax $1 Million Economic Nexus Threshold

For tax years beginning on or after January 1, 2022, the New York City (NYC) Business Corporation Tax is now imposed on corporations “For the privilege of doing business, or of employing capital, or of owning or leasing property in the city in a corporate or organized capacity, or of maintaining an office in the city, or of deriving receipts from activity in the city . . . .”[1]

A corporation is “deriving receipts from activity in the city” if the numerator of the receipts factor computed for apportioning income to the city is at least one million dollars.[2] The threshold is subject to inflation adjustments once the consumer price index has changed by 10% or more.[3]

In addition, for corporations that issue bank, credit, travel and entertainment cards, those businesses will be subject to NYC Business Corporation Tax if:

  1. They have issued cards to at least 1,000 customers with a mailing address in NYC as of the last day of the taxable year,
  2. They have contracts with merchants and total number of locations in NYC covered by those merchant contracts is at least 1,000 during the taxable year, or
  3. The sum of (1) and (2) equals at least 1,000.

For corporations that are part of a combined group, each member that derives receipts in NYC of at least $10,000 (but less than the applicable threshold) will be deemed to meet the threshold if the aggregate amount of receipts derived in NYC from all members of the combined group with at least $10,000 of NYC receipts meets the threshold. For example, if a combined group consists of 5 corporate members, and each member has $200,000 of NYC receipts, then each member is deemed to meet the nexus threshold.[4]

The same combined concept is applied for card issuers that are members of a combined group where such member has a minimum of 10 NYC customers, NYC locations, or both. If the aggregate amount of all NYC customers, NYC locations, or both for all members of the combined group with at least 10 meets the applicable threshold, then each such member will be deemed subject to NYC Business Corporation Tax.[5]

If a corporation is a partner in a partnership, and the partnership meets the new nexus threshold, then the corporate partner will be subject to NYC Business Corporation Tax.[6]

Finally, these new nexus rules do not apply to the NYC Unincorporated Business Tax or to the NYC General Corporation Tax. That means that partnerships and S-corporations themselves are not subject to the new nexus provisions. Please note that as a result of NYC tax reform in 2015, C-corporations that were previously subject to the NYC General Corporation Tax are now subject to the NYC Business Corporation Tax. However, S-corporations continue to be subject to the NYC General Corporation Tax, and the legislation discussed above did not amend that tax.

NYC Pass-Through Entity Tax now Available for the 2022 Tax Year

NYC’s Pass-Through Entity Tax (PTET), which was enacted back in April and you can read about in this SALT Newsletter article, was originally applicable to tax years beginning on or after January 1, 2023.  However, SB 9454 amends that original legislation to make the PTET applicable to tax years beginning on or after January 1, 2022. Please check the New York State PTET webpage for information about making the NYC PTET election, but note that an eligible PTE must first elect into the New York State PTET (which was due by September 15, 2022).

The bottom line

Aprio’s SALT team can assist your business with determining if it has a NYC Business Corporation Tax filing requirement for 2022 and the potential tax impact. For pass-through entities, we are available to discuss how your owners could benefit from PTET elections, which are now available in almost 30 states (plus NYC).  We constantly monitor these and other important state tax topics, and we will include any significant developments in future issues of the Aprio SALT Newsletter.

Contact Jeff Glickman, partner-in-charge of Aprio’s SALT practice, at for more information.

This article was featured in the September 2022 SALT newsletter.

[1] NYC Admin. Code § 11-653(1)(a). The italicized language was added by the legislation.

[2] NYC Admin. Code § 11-653(1)(b). The rules for apportioning income to NYC based on the receipts factor are found int Code section 111-654.2.

[3] NYC Admin. Code § 11-653(1)(e). The change is first measured compared to 2022, and then it will be measured based on the time of the most recent adjustment.

[4] NYC Admin. Code § 11-653(1)(d)(1). 

[5] NYC Admin. Code § 11-653(1)(d)(2).

[6] NYC Admin. Code § 11-653(1)(f).


Any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or under any state or local tax law or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Please do not hesitate to contact us if you have any questions regarding the matter.

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About the Author

Jeff Glickman

Jeff Glickman is the partner-in-charge of Aprio, LLP’s State and Local Tax (SALT) practice. He has over 18 years of SALT consulting experience, advising domestic and international companies in all industries on minimizing their multistate liabilities and risks. He puts cash back into his clients’ businesses by identifying their eligibility for and assisting them in claiming various tax credits, including jobs/investment, retraining, and film/entertainment tax credits. Jeff also maintains a multistate administrative tax dispute and negotiations practice, including obtaining private letter rulings, preparing and negotiating voluntary disclosure agreements, pursuing refund claims, and assisting clients during audits.

(770) 353-4791