Restores conformity with certain provisions of the Internal Revenue Code relating to business expensing; repealer

◆ The sponsor's argument

Why Jeremy Cooney says this is needed

Following enactment of H.R-1, New York enacted legislation decoupling from several federal business expensing provisions, requiring taxpayers to make separate New York tax adjustments and calculations rather than relying upon the Internal Revenue Code. While intended to preserve state revenue, these provisions increased compliance costs by requiring sepa- rate state-level calculations for deductions already calculated for federal tax purposes. Specifically, this bill restores conformity with Internal Revenue Code sections 168(n) and 174A by repealing New York's decoupling provisions enacted in Part F of Chapter 59 of the Laws of 2026. As a result, taxpayers will no longer be required to perform duplicative state calcu- lations or make related add-back modifications for qualified production property and research and experimental expenditures. The bill applies prospectively beginning with tax year 2027 and does not alter returns filed for the 2025 or 2026 tax years. Federal tax law is already the starting point for New York's tax system. Keeping conformity where practicable, lets taxpayers use one set of calculations for both federal and state purposes instead of maintaining separate state adjustments. Restoring conformity with the Internal Revenue Code reduces administrative complexity, simplifies tax compli- ance, and promotes consistency between federal and state tax adminis- tration. This simplification is important to New York State as an economy driven by advanced manufacturing, optics and photonics, life sciences, higher education, and emerging technology industries. Companies investing in new production facilities, research laboratories, and innovative tech- nologies benefit from a tax system that is predictable, transparent, and consistent with federal law. By eliminating unnecessary state-specific calculations, New York can improve its competitiveness for business investment while allowing companies to devote more resources to expand- ing operations, commercializing new technologies, and creating high quality jobs. In an increasingly competitive national landscape, businesses evaluating where to locate new manufacturing facilities, research operations, and capital investments consider not only tax rates, but also the complexity and predictability of a state's tax system. Maintaining unnecessary deviations from the federal tax code places New York at a competitive disadvantage, creating additional compliance costs that neighboring and competitor states may not impose. Over time, this added complexity may discourage new businesses from investing in New York and could influence existing employers to expand future operations elsewhere. Restoring conformity helps ensure that New York and innovation hubs such as Rochester remain attractive destinations for entrepreneurs, manufactur- ers, and research-intensive industries competing in the global economy.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.