Bill > S05431

This bill reinstates a bank tax with a complex calculation method, allowing taxation based on the highest of four different bases: a tax on allocated entire net income, a tax on allocated alternative entire net income, a tax on allocated taxable assets, or a fixed dollar minimum tax. The bill prohibits banks from segregating their income and capital into separate business and investment categories. Specifically, the bill creates a new Article 32 in the tax law that provides comprehensive rules for franchise taxation of banking corporations. The tax will be calculated by determining the highest amount among four different computational methods: 1) tax on entire net income, 2) tax on alternative entire net income, 3) tax on taxable assets, and 4) a fixed dollar minimum tax. The legislation aims to ensure that banks cannot artificially reduce their tax liability by dividing their financial activities into different categories. The bill includes detailed provisions about how to calculate taxable income, define banking corporations, determine allocation percentages, compute tax, and handle various credits and deductions. It also includes complex rules about combined reporting for banking corporations, particularly for entities like captive REITs, captive RICs, and overcapitalized captive insurance companies. The legislation will take effect immediately and will apply to taxable years starting January 1, 2026, providing banks and tax authorities ample time to prepare for the new tax framework.

Budget and Finance

https://www.nysenate.gov/legislation/bills/2025/S5431