New York has a franchise tax that applies to:
The franchise tax return (Form CT-3) is the corporate franchise and income tax return filed by Article 9-A taxpayers, and it is typically prepared by a tax accountant. Most Article 9-A corporations are mandated to e-file returns and estimated tax unless they qualify for and obtain relief under New York's e-file mandate.
New York franchise tax filing deadlines are tied to the end of your tax year, not the date you began doing business. Your franchise tax return is generally due each year:
Your first return covers the period from when your corporation began its first tax year through the end of that tax year. These deadlines track federal corporate filing schedules and are subject to annual change; confirm against current New York Department of Taxation and Finance instructions each year.
The tax is calculated as the highest of three methods (NY refers to them as "bases"): Business income, Business capital, and Fixed dollar minimum tax. Each base has its own tax rate or threshold associated with it.
Form CT-3 walks your accountant through each base so the highest amount can be identified and reported.
The business income base equals federal taxable income apportioned to New York State with some adjustments. The default tax rate is 6.5%, though rates vary based on business type and size:
The 7.25% rate is a cliff rate: if your New York business income base exceeds $5 million for a taxable year beginning on or after January 1, 2021 and before January 1, 2027, the entire business income base is taxed at 7.25%, not just the portion above $5 million. This treatment is set out in New York Tax Law § 210(1)(a).
Under current enacted law, the 7.25% rate and the 0.1875% capital base rate are both scheduled to expire after tax year 2026, reverting the income rate to 6.5% for all taxpayers beginning in tax year 2027. These rates were extended through tax years beginning before January 1, 2027, under Part I of Chapter 59 of the Laws of 2023, as confirmed by the 2023 corporation tax changes summary. Active FY 2027 budget proposals could extend or increase these rates, but as of May 2026, no extension has been enacted.
The business capital base is the total business capital apportioned to New York State after deductions. General business taxpayers are taxed at 0.1875%, with a cap of $5,000,000 on the resulting tax. Qualified New York manufacturers, QETCs, cooperative housing corporations, and small business taxpayers pay 0% on the capital base, per the 2025 Form CT-3-I instructions.
The fixed dollar minimum tax is determined by the corporation's New York receipts. For general business corporations, the minimum ranges from $25 (for receipts of $100,000 or less) up to $200,000 (for receipts over $1 billion). Qualified New York manufacturers and QETCs follow a reduced schedule that caps at $3,750.
Corporations subject to Article 9-A that do business in the Metropolitan Commuter Transportation District (MCTD) and meet New York's nexus thresholds must also compute and pay an MTA surcharge on Form CT-3-M. The current surcharge rate is 30% of the franchise tax apportioned to the MCTD, and this rate was made permanent for tax years beginning on or after January 1, 2024, under Part GG of Chapter 59 of the Laws of 2023.
The MCTD includes New York City (Manhattan, Bronx, Brooklyn, Queens, Staten Island) and the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.
Corporations that expect to owe more than the estimated tax threshold in franchise tax after credits must file Form CT-400 (Estimated Tax for Corporations) and make quarterly payments. Most Article 9-A corporations are required to e-file their corporation tax returns and estimated tax (including Forms CT-3, CT-3-M, and CT-400), either directly through the Department's Corporation Tax Web File system or through tax software that supports e-filing. Taxpayers may request relief from the e-file mandate if they meet specific waiver criteria, such as approved software limitations, repeated e-file rejections, or other reasonable cause recognized by the Department.
For tax years beginning before January 1, 2026 (including tax year 2025 returns filed in 2026), the estimated payment threshold is $1,000. For tax years beginning on or after January 1, 2026, Part R of Chapter 59 of the Laws of 2025 increases the mandatory first installment and estimated tax thresholds from $1,000 to $5,000 for corporations subject to tax under Article 9-A. As a result of the same change, S corporations subject to Article 9-A are no longer required to make estimated tax payments. According to the 2025 corporation tax changes summary from the New York Department of Taxation and Finance, corporations subject to Articles 9 and 33 retain the $1,000 threshold.
Discern can provide registered agent services in New York, file your Secretary of State reports, notify you when tax obligations are due, and help you track compliance across all your entities. New York's franchise tax calculation requires detailed financial information and is typically handled by an accountant through the state's e-filing system, but Discern keeps you informed of deadlines and filing requirements.
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Below are answers to common questions about the New York franchise tax and its filing requirements.
Who is subject to the New York franchise tax?
Domestic (New York) corporations and foreign corporations doing business in New York, employing capital, owning or leasing property, maintaining an office, or deriving receipts from activity in the state are generally subject to the Article 9-A franchise tax. Corporations that are general or limited partners in partnerships doing business in New York are also subject to tax under Article 9-A. Always confirm your filing obligation against current Tax Law and Department guidance.
What are the three bases used to calculate the franchise tax?
New York calculates the franchise tax using three bases: business income, business capital, and the fixed dollar minimum tax. Corporations pay whichever base produces the highest amount.
When did the estimated tax threshold change from $1,000 to $5,000?
The threshold increased to $5,000 for corporations subject to tax under Article 9-A for tax years beginning on or after January 1, 2026, under Part R of Chapter 59 of the Laws of 2025. As a result of the same change, S corporations subject to Article 9-A are no longer required to make estimated payments. Corporations subject to Articles 9 and 33 retain the $1,000 threshold.
Is the MTA surcharge required for all New York corporations?
The MTA surcharge applies to Article 9-A corporations that do business within the Metropolitan Commuter Transportation District (which includes New York City and seven surrounding counties) and meet New York's nexus thresholds. The current rate is 30% of the franchise tax apportioned to the MCTD.
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