About this programme
The Life Sciences Research and Development Tax Credit is a New York State refundable tax credit for new life sciences companies that carry out qualified R&D inside New York. It is jointly run: Empire State Development (ESD) certifies which companies qualify and issues each company's certificate of tax credit, while the Department of Taxation and Finance processes the actual credit claim on the state tax return.
The programme targets early-stage life sciences firms rather than established ones. To qualify, a business has to pass New York's statutory "new business" test — broadly, it cannot be majority-owned by another New York taxpayer, cannot be substantially similar in ownership and operations to a company that is or was a New York taxpayer, and cannot itself have been a New York taxpayer for more than five years. The test applies the same way whether the company is founded in New York or relocating from elsewhere.
Eligible fields are defined broadly: agricultural biotechnology, biogenerics, bioinformatics, biomedical engineering, biopharmaceuticals, academic medical centers, biotechnology, chemical synthesis and chemistry technology, medical diagnostics, genomics, medical image analysis, marine biology, medical devices, medical nanotechnology, natural product pharmaceuticals, proteomics, regenerative medicine, RNA interference, stem cell research, medical and neurological clinical trials, health robotics, and veterinary science.
Qualified expenses are only those incurred in New York State on or after January 1, 2018, and follow the definition of qualified research expenses under Section 41(b) of the federal Internal Revenue Code — but contract research expenses are specifically excluded. A company can receive the credit for up to three consecutive years, and must apply separately for each of those years.
How it works
Credit rate depends on employee count in the applicable year: 15% of qualified in-state R&D expenditure for companies with 10 or more employees, and 20% for companies with fewer than 10 employees. The test is applied fresh each year of participation — a company that grows past 10 employees between year one and year two drops from the 20% to the 15% rate for that later year, and vice versa if it shrinks.
Employment for this test is the average of full-time headcount (excluding general executive officers) measured on March 31, June 30, September 30 and December 31 of the year, divided by four. A full-time employee is defined as a job of at least 35 hours a week, including full-time-equivalent combinations of part-time roles.
The credit is capped at $500,000 per company per year, with a $1.5 million lifetime cap across the three eligible years. The statewide programme allocation is $10 million per year across all applicants — ESD's certificate specifies the amount and the tax years each company is approved for.
The credit is fully refundable: it can reduce a company's state tax liability to the statutory minimum, and any amount beyond that liability is treated as an overpayment that can be refunded or carried forward, rather than simply lost as an unused credit.
There is no job-creation requirement to participate — employee count only determines which credit rate (15% vs 20%) applies, not eligibility itself.
A business cannot use the same jobs/investment activity as the basis for both this credit and the Excelsior Jobs Program simultaneously. Using different, non-overlapping activities as the basis for each is possible, but ESD makes that determination on the specific facts.
Who can apply
The applicant must be certified by ESD as a "qualified life sciences company" — a new business devoting the majority of its efforts to research, development, technology transfer and commercialization in an eligible life sciences field (see the field list above).
The applicant must independently satisfy New York's statutory "new business" test under Tax Law §210-b(1)(f) (or §606(a)(10) for an individual owner): less than 50% ownership/control by another New York taxpayer company (for a C-corp), not substantially similar in ownership and operations to a company that is or was a New York taxpayer, and no more than five years as a New York taxpayer (or, for a sole proprietor/partner, five years operating the entity in New York).
The applicant must have incurred qualified R&D expenses — wages for qualified research services, supplies used in the research, and payments for the right to use computers in the research — in New York State on or after January 1, 2018. Contract research expenses do not qualify.
The applicant must hold a certificate of tax credit from ESD before claiming the credit; the certificate is what fixes the approved amount and the specific tax year(s) it applies to.
How to apply
- Complete the ESD application (fillable PDF), sign it, and scan it.
- Complete the accompanying application Excel template with the qualified expense detail.
- Email both completed documents to ESD's Economic Incentives Department to apply for certification.
- Once ESD certifies the company and issues a certificate of tax credit specifying the approved amount and tax year, file Form CT-648 (corporations) or Form IT-648 (all other entity types) with the state tax return for that year, attaching a copy of the ESD certificate.
- Repeat the ESD application and Form CT-648/IT-648 filing separately for each of the (up to three) eligible years — the programme does not carry a multi-year approval forward automatically.
Documents you’ll typically need
- ESD Life Sciences R&D Tax Credit application (fillable PDF, signed and scanned)
- ESD application Excel template (qualified expense detail)
- Certificate of tax credit issued by ESD (attached to the tax filing)
- Form CT-648 (corporations) or Form IT-648 (all other entities), filed with the relevant tax return (IT-201-ATT, IT-203-ATT, IT-204, or IT-205) using code 648
Frequently asked
Who actually decides if my company qualifies?
Empire State Development, not the tax department. ESD certifies whether you meet the "qualified life sciences company" and "new business" tests and issues the certificate of tax credit; the Department of Taxation and Finance only processes the credit once you file Form CT-648/IT-648 with that certificate attached.
Does a company relocating to New York automatically count as a "new business"?
No. ESD's own FAQ is explicit that the new-business test applies the same way regardless of whether the company is already in New York or relocating from elsewhere — being new to the state does not by itself satisfy the test.
Do we need to hit a job-creation target to qualify?
No. The programme has no job-creation requirement. Employee count only determines which credit rate applies (15% at 10+ employees, 20% under 10) — it does not gate eligibility itself.
What if our qualified R&D spend is well above the credit cap?
The credit itself is capped regardless of spend: a maximum of $500,000 in any one tax year, and $1.5 million across the full three-year participation period. Spend beyond what generates the cap simply does not produce additional credit.
Can we use contract research (an outside CRO or lab) toward the credit?
No. Qualified research expenses follow the federal Section 41(b) definition — wages for qualifying research work, research supplies, and payments for the right to use computers in the research — but contract research expenses are explicitly excluded from what counts.
Is this the same as the Excelsior Jobs Program?
No, they are separate ESD programmes, and a business cannot use the same jobs or investment activity as the basis for both at once. A company can potentially participate in both if the qualifying activities for each are genuinely different, but ESD decides that on the specific facts.
How is our employee count actually measured for the 15%/20% test?
ESD averages full-time headcount (excluding general executive officers) on four dates — March 31, June 30, September 30, and December 31 — and divides by four. A full-time employee is a role of at least 35 hours a week, and part-time roles can be combined into a full-time-equivalent.
What happens to credit we can't use against our tax bill in a given year?
The credit is fully refundable. It can bring your state tax liability down to the statutory minimum, and any amount beyond that is treated as an overpayment of tax that can be refunded or credited forward, rather than expiring unused.
Reviewed 2026-08-16. Programmes change — confirm current eligibility, amounts and deadlines on the official page before you apply. CapEasy is a private consultancy and is not affiliated with any government authority.