State of New York Provides Retailers With Tax Credit for Security Improvements

What Retailers Need to Know About Using New York’s Retail Security Tax Credit

On April 20, 2024, the New York State legislature passed its annual budget measure for fiscal year 2025 which addresses multiple priorities and enacts key proposals from Gov. Kathy Hochul. Of significance to New York business owners, workers and consumers, the measure included a new Retail Security Tax Credit, which for tax years 2024 and 2025 will provide assistance to small businesses for investing in necessary equipment to protect both their employees and merchandise.

Each year, retailers throughout the state lose around $4.4 billion a year from various kinds of thefts. The budget agreement includes the new tax credit among Gov. Hochul’s five-point policy plan aimed at fighting organized retail theft, which includes:

• Increasing criminal penalties for any individual who attacks a retail worker from a misdemeanor to a Class E felony
• Allowing prosecutors to combine the value of all stolen goods from different stores when charges are brought against the criminal
• $40.2 million to support retail theft teams at state police, district attorneys’ offices and local law enforcement agencies, including the addition of 100 New York State Police personnel who specifically focus on retail crimes
• Making available a total of $5 million in tax credits for small businesses in each of the calendar years 2024 and 2025 to invest in extra security measures, for businesses that spend the threshold amount on their retail theft prevention measures (see below)

Retail Council of New York State President and CEO Melissa O’Connor was quoted in a release from the governor’s office, saying, “The retail industry strongly supports each budget provision related to organized retail crime and habitual retail theft in New York State, as we have prioritized many of these initiatives for years. I want to thank Governor Kathy Hochul for listening to the challenges facing stores and employees and leading us to a point where we will soon have new laws to effectively prevent this illegal activity. Our work on store and community safety will not stop upon enactment of this year’s state budget. We will continue to engage with all stakeholders to ensure a safe shopping environment for all New Yorkers.”

About the New Retail Security Tax Credit:

To be eligible for this tax credit, a business must have the following:

• Incur qualified retail theft prevention measure expenses in the taxable year for which the credit is sought:
  • Expenses must exceed $4,000 at one location for businesses with 25 or fewer employees.
  • Expenses must exceed $6,000 at one location for businesses with 26 to 50 employees.
• File a tax return pursuant to state Tax Law Articles 0 (Corporation Tax), 9-A (Franchise Tax on Business Corporations) or 22 (Personal Income).
• Have qualified retail theft prevention measure expenses that exceed $3,000 for each New York retail location during each taxable year.
• Provide certification in a manner that is described by the commissioner that the business participates in a community antitheft partnership as established by the division between local business and law enforcement agencies.

A “qualified retail theft prevention measure expense” refers to any combination of costs related to retail theft prevention measures that is paid or incurred by a qualifying business that exceeds $3,000 per New York retail location. There is a cap to the amount of credits a business can claim, up to $5 million per calendar year.

All of the following are considered retail theft prevention measures:

• Security officers registered under the state’s Security Guard Act
• Security cameras
• Perimeter security lighting (interior and exterior)
• Locking or hardening mechanisms
• Alarm systems
• Access control systems
• Exterior license plate reader technology

To get approved for the credit, a business owner must submit a completed application yearly as prescribed by the commissioner by Oct. 31 of each year.

SIA members seeking more insight into this tax credit program can contact George Sewell, SIA government relations coordinator, at gsewell@securityindustry.org.