To help small businesses succeed, New York City Mayor Bill de Blasio and other officials have announced a new bill that will make changes to the Commercial Rent Tax (CRT).
Effective July 1, 2018, the threshold for Manhattan’s CRT for businesses with annual incomes up to $5 million will increase from $250,000 to $500,000 annual rent, with the benefit to be provided on a sliding scale for businesses with annual incomes between $5 million and $10 million or those paying $500,000 to $550,000 in rent.
Overall, these changes will reduce taxes for 2,700 small businesses, including 1,800 that will not be taxed at all. Upon implementation, the average business owner in NYC is expected to receive annual tax relief between $11,300 and $13,000.
This reform also represents the first change to be made on the CRT since 2001. It is also the city’s first legislation that specifically targets small business with 99 percent of the benefit going to businesses with one or two taxable locations.
“Small businesses are the lifeblood of this city. That’s why we designed this bill to ensure they’re the ones we’re helping,” Mayor de Blasio said. “The Commercial Rent Tax in its previous form is outdated and we’re proud to make the first changes in more than a decade to bring relief to thousands of small businesses.”
Currently, the CRT is being shouldered by commercial tenants below 96th St. and above Murray St. in Manhattan. These businesses pay $250,000 or more in annual rent with an effective tax rate of 3.9 percent.