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Bill

A 11055

Establishes the New York rural growth fund tax credit and the New York rural growth fund

2025 Regular Session Introduced by Paula Kay

Establishes the New York rural growth fund with a 70% tax credit for investors in certified rural growth funds to spur private capital and rural job growth.

REFERRED TO WAYS AND MEANS
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Bill Summary · A 11055

Summary of Bill A. 11055 (2025-2026, New York)

Purpose and overall intent

This bill establishes the New York rural growth fund and creates a state tax credit program to encourage private investment in rural businesses located in New York. The core idea is to channel private capital into rural growth investments by certifying rural business growth funds and providing a 70% of eligible investment authority tax credit to investors, financed through a new state fund.

Key provisions and changes

Creation of the New York rural growth fund

  • Establishes a dedicated fund (New York rural growth fund) in the state财政 system, to be managed jointly by the state comptroller and the Commissioner of Taxation and Finance.
  • The fund collects fees generated under the bill’s tax-credit mechanism and any other appropriations, and funds are used solely to support the rural growth fund program.

Certification and operation of rural growth funds

  • A Rural Growth Fund must be certified by the Department of Economic Development (DED) after meeting several criteria, including:
    • Being licensed as a rural business investment company or a small business investment company.
    • Demonstrating substantial private investment in rural areas (investments by the applicant and affiliates totaling at least $100 million in operating companies in rural areas).
    • Providing a business plan, estimated jobs created and retained, and a credible ten-year revenue impact assessment from a third-party economic forecasting firm.
    • Obtaining binding affidavits from investors of credit-eligible capital contributions.
    • Paying a non-refundable $10,000 application fee.
  • The department sets caps on certifications: up to $250 million in eligible investment authority and up to $175 million in total tax credits, with prioritization given to applications received earlier (subject to limits).

Tax credits and eligible investments

  • Tax credits equal 70% of the eligible investment authority certified for each rural growth fund.
  • Credits are available to investors who contributed credit-eligible capital to a rural growth fund and receive a tax credit certificate from the department.
  • Credits can be claimed in five taxable years: the third through the seventh anniversaries of the fund’s closing date (with annual caps: up to 1/5 of the total per year).
  • Credits are non-transferable except to the investor’s affiliate; they can be used against New York state tax and certain insurance taxes. Any unused credits can be carried forward.

Eligible investments and definitions

  • A “credit-eligible capital contribution” is a cash investment in a rural growth fund in exchange for equity or a debt instrument with:

    • At least five years maturity,
    • Level principal repayment over five years,
    • No profits-based or performance-based payment features.

  • A “rural business” is defined by size and income thresholds and excludes certain activities (e.g., gambling facilities, certain adult services, real estate-heavy businesses, non-profits, etc.).

  • “Principal operations in New York” and “rural area” definitions align with existing state criteria (e.g., Executive Law references).

Compliance, penalties, and reporting

  • Funds must meet investment and job targets; failure to do so may trigger penalties: a clawback equal to the credit amount times the shortfall ratio.
  • Funds must report annually on investments, jobs created/retained, and other program metrics as part of ongoing oversight.
  • Funds may exit the program after seven years if they have not engaged in prohibited activities and meet certain criteria.

Fees and administration

  • Certified funds pay an annual fee of $20,000 to the department until exit.
  • Fees and revenues from the program go into the New York rural growth fund.

Who is affected

  • Private investors in rural growth funds may be eligible for a state tax credit.
  • Rural businesses that receive investments through certified rural growth funds may benefit from increased capital and growth opportunities.
  • Rural communities may experience job creation and retention as a result of funded investments.
  • Banks, fund managers, and investment entities operating as rural business investment companies or small business investment companies are directly impacted by regulatory and certification requirements.

Effective date and scope

  • Effective July 1, 2026, applying to tax years beginning on or after that date.
  • Establishes a new framework for credits, funding, and oversight to support rural economic development.

If you’d like, I can provide a section-by-section mapping to existing law or a timeline of key milestones and eligibility steps.

Compiled from official sources — confirm details with the bill’s official record.

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