New York State

Personal Income Tax Rates. The scheduled decrease in the personal income tax rates effective for tax years beginning after 1989 has been postponed until tax years beginning after 1992. New rate schedules that phase in this decrease have been issued with the following maximum rates for joint returns.

* Taxable years beginning 1990--7.87% over 26,006

* Taxable years beginning in 1991--7.7% over $28,000

* Taxable years beginning in 1991--7.5% over 25,006

* Taxable years beginning after 1992--7% over $26,000

Standard Deduction The scheduled increase in the standard deduction effective for tax years beginning after 1989 has been postponed until tax years beginning after 1992. The increase is being phased in according to the following schedule.

For dependents the standard deduction will be $2,800 for tax years beginning after 1989 and before 1993; for years beginning after 1993 the standard deduction for dependents will be $2,900.

Household Credit. The household credit, set to be phased out in tax years beginning after 1989 and eliminated for tax years beginning in 1991, has been extended. The household credit will remain available for tax years beginning before 1994 but the credit allowed will be reduced for tax years beginning in 1993.

Interest on Underpayments & Overpayments. The interest rate on both underpayments and overpayments has been increased, effective October 1, 1990, to the sum of the federal short-term rate, rounded to the nearest percent plus two percentage points.

Franchise Tax

S Corporations. For tax years beginning after 1989, the filing fee of $325 has been repealed and replaced by a franchise tax. The tax rate is equal to the difference between the tax computed using the entire net income base, including surcharges imposed but not including the Metropolitan Commuter Transportation District (M.C.T.D.) surcharge, and the tax computed using the top personal income tax rate. In no event may the tax be lower than the fixed dollar minimum tax of $325. Table 1 shows the calculation of the S corporation tax rate.

S corporations that have entire net income of $200,000 or less do not have to take the surcharge into consideration and certain qualifying small business corporations may be entitled to use a rate lower than 9% in computing the S corporation tax rate. This may allow the use of a lower S corporation tax rate for the above types of corporations.

S corporations are required to make estimated tax payments, in the same manner as a C corporation, for taxable years beginning after 1989. The first estimated tax is due for the installment due after September 22, 1990. For calendar year corporations this means that the entire estimated tax, including any applicable surcharge, must be paid on the December 15, 1990, estimated tax payment due date. For fiscal year corporations the appropriate percentage (50%, 75% or 100%) of the estimated tax, including any applicable surcharge, must be paid on the first estimated tax payment due after September 22, 1990, and any remaining balance paid on the appropriate remaining estimated tax due dates.

C Corporations. For tax years ending after june 30, 1990, and before July 1, 1993, all foreign and domestic corporations, including S corporations are subject to a tax surcharge (in addition to any M.C.T.D. surcharge imposed). The surcharge is to be computed according to the following schedule:

* Tax years ending after june 30, 1990, but before july 1, 1992--15 %

* Tax years ending after june 30, 1992, but before july 1, 1993--10%

The surcharge does not apply to S corporations whose entire net income is $200,000 or less. The M.C.T.D surcharge is to be computed based on the tax, without regard to the above surcharge.

All estimated payments due on or after September 15, 1990 must be adjusted to take into consideration the surcharge. For calendar year corporations this means that the entire 75% of the estimated surcharge must be included in the September 15, 1990, estimated tax payment. For fiscal year corporations the appropriate percentage (50%, 75% or 100%) of the surcharge must be included in the first estimated tax payment due after September 15, 1990, and any remaining balance paid on the appropriate remaining estimated tax due dates.

New York City Tax

Personal Income Tax. For tax years beginning in 1990 and 1991 a tax surcharge is imposed on resident individuals, estates and trusts; this surcharge does not apply to nonresidents. This surcharge amounts to approximately .51% of New York City Taxable Income and will be included in the tax rate tables and schedules.

General Corporation Tax. New York City has changed the due dates with regard to the general corporation tax estimated tax. The new law requires the final two payments to be made by the 15th day of the ninth and twelfth months of the year. For calendar year taxpayers this means that the final two payments are due on September 15 and December 15. This brings New York City due dates into conformity with the New York State due dates. Table 2 omitted reflects the revised New York City due dates.