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Department of Taxation and Finance

New York State tax implications of recent federal COVID relief

The federal Coronavirus Aid, Relief and Economic Security Act (CARES ACT), Consolidated Appropriations Act, 2021, and American Rescue Plan Act of 2021 contained a number of tax provisions that impact the computation of taxable income for individuals and businesses, modify eligibility for certain tax credits, and provide assistance to taxpayers and businesses affected by COVID-19.

New York State follows the federal tax treatment resulting from some of these federal provisions and they will automatically be reflected in the New York State personal income and corporation tax computations. However, others require state-specific adjustments on New York State personal income and corporation tax returns.

Below are questions and answers regarding New York State’s treatment of some of the most high-profile items. These and other provisions that require state adjustments are explicitly addressed in tax form instructions, such as Form IT-558-I, New York State Adjustments due to Decoupling from the IRC, and Form CT-225-I, New York State Modifications, (or Form CT-225-A for filers of combined franchise tax returns). See Current year forms by form number to view the 2020 forms and instructions. 

Generally, if a federal provision is not specifically addressed in the New York State form instructions, it means no separate adjustments are necessary at the state level.

Frequently Asked Questions

These payments are not included in federal adjusted gross income. You are not required to include the payments when determining your New York adjusted gross income.

New York State follows the federal treatment of RMDs. This includes the waiver of RMDs for tax year 2020 and the extended rollover period.

New York State follows the federal treatment. The income will be included in New York adjusted gross income in the same year it is included in federal adjusted gross income.

New York State follows the federal treatment for both personal income and corporation taxes. If the forgiven loan is excluded from federal income, it is also excluded from New York income.

New York State follows the federal treatment for both personal income and corporation taxes. If the expenses related to the forgiven loan are deducted in computing federal income, these deductions are automatically excluded from New York income.

New York State does not follow the CARES Act changes to NOLs. New York State personal income taxpayers must recompute their federal NOL deduction using the rules in place prior to any CARES Act or subsequent federal changes. For example:

  • a federal NOL deduction for losses incurred in tax year 2018 or later is limited to 80% of the current year federal taxable income (computed as if the changes to the IRC after March 1, 2020, did not occur);
  • there is no carryback of losses incurred in tax year 2018 or later (except for certain farming losses); and
  • excess business losses disallowed will be treated as a net operating loss carryforward to the following tax year.

For New York State income tax purposes, an NOL deduction is limited to the lesser of:

  • the federal NOL deduction computed using the rules in place prior to any CARES Act or subsequent federal changes, or
  • the federal taxable income computed:
    • using the rules in place prior to any CARES Act or subsequent federal changes, and
    • without the federal NOL deduction.

For New York State business corporation tax purposes, New York had its own rules for NOLs pre-CARES Act. These rules were not impacted by the federal changes. See Form CT-3.4, Net Operating Loss Deduction.

New York State personal income tax does not conform to the federal changes to QIP depreciation.

For tax year 2019 and earlier, New York State personal income tax returns must be prepared using information from the federal income tax returns the IRS made available prior to March 1, 2020. To find copies of the 2019 federal forms issued prior to March 1, 2020, see 2019 federal income tax returns—supplement to N-20-7

For tax year 2020, the differences in New York State and federal treatment should be reported using Form IT-558, New York State Adjustments due to Decoupling from the IRC.

New York State corporation tax generally follows the federal treatment of QIP depreciation. However, if a federal special depreciation deduction allowed under Internal Revenue Code (IRC) section 168(k) for QIP (or any other qualified property) was claimed, Form CT-399, Depreciation Adjustment Schedule, must be filed to compute the New York State depreciation deduction without regard to IRC section 168(k).

New York State does not follow this CARES Act provision. If a taxpayer claims the deduction on their federal return, they must add it back using Form IT-558, New York State Adjustments due to Decoupling from the IRC.

New York State follows the federal tax treatment resulting from these provisions in the federal Consolidated Appropriations Act, 2021, and they will automatically be reflected in the New York State income tax computation. Therefore, no adjustments to federal adjusted gross income will be required on the New York State income tax return.

No. Under longstanding New York State law, unemployment compensation is subject to tax, which means you should report the full amount of unemployment compensation on your New York State personal income tax return. If you exclude unemployment compensation on your federal return, as allowed under the American Rescue Plan Act of 2021, you must add back the excluded unemployment compensation on your New York State return.

Form IT-558, New York State Adjustments due to Decoupling from the IRC, has been updated to report this add-back as adjustment code A-011. See Personal income tax up-to-date information for 2020 (Articles 22 and 30).

If you have not yet filed your 2020 New York State return, and file using software, the software should already account for this update and add back the unemployment compensation excluded from federal gross income. If you do not file using software, make sure to add back the federal unemployment compensation exclusion.

If you already filed your 2020 New York State return, and you did not add back unemployment compensation that was excluded from your federal gross income, then you must file an amended return with New York State. If you did not exclude unemployment compensation from your federal gross income, do not file an amended return with New York State.

Additional information

Updated: