How New York's Excelsior Jobs Program Works For Tech Startups
Software and research companies need just five net new jobs to qualify for New York's Excelsior Jobs Program tax credits. Here is how the thresholds and application actually work.
New York State's Excelsior Jobs Program is one of the tax credits Manhattan founders and investors ask about when a company is hiring or signing a lease in the city. It offers five refundable tax credits to firms in targeted industries, including software development and scientific research and development, that commit to creating jobs or making capital investments in New York.
The rules are set by Empire State Development, the state's economic development agency, through Article 17 of the Economic Development Law and its implementing regulations. The thresholds are lower for tech and research companies than for most other eligible industries, but the eligibility and exclusion rules are specific enough to trip up an unprepared applicant.
What Counts As A Net New Job
Empire State Development's regulations define a "net new job" narrowly. It must be a full-time, permanent, private-sector position — at least 35 hours a week, not primarily retail work, filled for more than six months, and eligible for the same benefits the company extends to comparable employees. Two part-time employees can be combined to meet the 35-hour threshold.
The job also has to be new to New York State: it cannot be transferred from another location the business already operates in-state, or created through a merger, acquisition or reorganization. And it must push total in-state employment above the company's "employment base," calculated as the average headcount over the four quarters before its certificate of eligibility was issued.
The Thresholds For Software And Research Startups
Under Empire State Development's regulations, a business operating predominantly in software development — defined as creating coded computer instructions, or producing or post-producing video games and other "new media" — must create at least five net new jobs in New York to qualify. A scientific research and development firm, defined as conducting research or experimental development in the physical, engineering or life sciences, faces the same five-job minimum. That compares with 25 net new jobs for financial-services or back-office operations and 50 for distribution centers.
A company that can't hit the job minimum has a second path: the Investment Track. It requires retaining at least 25 full-time job equivalents and demonstrating a benefit-cost ratio of at least 10 to 1 — meaning at least $10 in projected new wages and capital investment for every $1 of credit claimed. Scientific research firms also have a "regionally significant project" tier requiring 10 net new jobs and a $3 million capital investment; Empire State Development's program materials list that tier as not applicable to software development.
What The Five Credits Actually Pay
The Excelsior Jobs Tax Credit pays up to 6.85% of gross wages for each net new job. The Excelsior Investment Tax Credit pays 2% of qualified investment in depreciable business property with a useful life of four years or more. The Excelsior Research and Development Tax Credit equals 50% of the New York-related portion of a company's federal R&D credit, capped at 6% of its in-state research expenditures. Enhanced rates apply to "green projects" and semiconductor supply chain projects.
Two more credits round out the program: the Excelsior Real Property Tax Credit, available to companies in a state-designated "investment zone" or classified as regionally significant, which pays a declining share of eligible property taxes — 50% in year one, down to 5% by year 10; and the Excelsior Child Care Services Tax Credit, worth up to 6% of a company's net new spending on employee child care. All five credits are fully refundable and can be claimed for up to 10 consecutive tax years, starting the first year a company holds a certificate of tax credit or appears on its preliminary schedule of benefits, whichever is later.
Which Companies Are Excluded
Not-for-profits cannot participate. Nor can businesses whose primary function is providing services — defined in the regulations to include personal services, state- or court-licensed professional services, and utilities. Companies operating predominantly in retail or entertainment are excluded too, unless they qualify as a defined "entertainment company" engaged in film, television or similar production, or as a music production business. Electricity generation or distribution, natural gas distribution, and steam production tied to electricity generation are excluded outright.
Accepting Excelsior benefits also means giving up Empire Zone benefits permanently at any location that qualifies for the new credit. Applicants cannot owe past-due state or local taxes, and must certify under penalty of perjury that they are in substantial compliance with environmental and worker-protection law.
“A software developer needs five net new jobs to qualify — the same threshold as a scientific research firm, and far below the 25 required of a back-office operation.”
How To Apply, And What Happens If You Fall Short
Businesses apply directly to Empire State Development, through its regional offices or industry directors, or by filing New York State's Consolidated Funding Application. On request, the agency can require a schedule of expected job titles and salaries, three years of tax returns, projected qualified investments, and an estimate of the federal R&D credit the company expects to claim. Approved applicants receive a certificate of eligibility and a preliminary schedule of benefits outlining what they can claim in each of up to 10 years.
Each year, a participant must file a performance report proving it still meets the criteria before Empire State Development issues the certificate of tax credit needed to file Form IT-607, or Form CT-607 for S corporations, with the state Tax Department. A company that creates less than 75% of its projected jobs in a given year gets no certificate — and no credit — for that year; between 75% and 100%, the credit is prorated. A missed year does not extend the underlying 10-year benefit period.
What Changed In Albany's Latest Budget
New York's 2025-26 state budget, signed by Governor Kathy Hochul, pushed the program's tax-credit authorization out to taxable years beginning before January 1, 2050, and set the statewide annual credit cap at $200 million a year from 2025 through 2034, according to the current text of Economic Development Law section 359. The same budget added enhanced credit rates specifically for semiconductor supply chain projects, which sit alongside the standard rates that apply to software and research companies.
Related coverage: What New York's Film Tax Credit Actually Does; How New York startups are hiring while the $100,000 H-1B fee sits in court; What A 421-a Abatement Is, And What Replaced It.
