Independent guide. Not affiliated with the IRS, SEC, any state filing office, or any CPA firm. Not legal, tax, or financial advice. Last reviewed June 2026.

State Deep Dive

C Corp vs S Corp in New York

New York imposes a separate state-level S election (Form CT-6). Without it, federal S corps are taxed as C corps in New York. Add New York City's own corporate taxes for corporations operating in the city, plus the MTA surcharge on C corporations doing business in the Metropolitan Commuter Transportation District, and New York becomes one of the more complex S corp states.

Updated October 2026. Not tax advice.

Common mistake

Federal S election does not give you NY S corp status.

You must file Form CT-6 (Election by a Federal S Corporation to be Treated as a New York S Corporation) with the New York Department of Taxation and Finance. The election is generally effective for the tax year of filing if filed within 75 days of the start of the year, or for the next year if filed later.

The CT-6 election requirement

Under N.Y. Tax Law Section 660, a corporation that is a federal S corporation must affirmatively elect S corp status for New York purposes by filing Form CT-6. All shareholders must consent. Without the CT-6:

  • The corporation files Form CT-3 as a C corp for New York
  • It pays the 6.5 percent Article 9-A franchise tax (7.25 percent on a business income base over $5M, for tax years beginning before 1 January 2027) at the entity level
  • Shareholders still receive a federal K-1 but pay no NY individual income tax on the pass-through (because NY does not recognize the federal pass-through)

This produces a worst-of-both-worlds result: federal pass-through (so shareholders pay federal personal tax on the K-1) plus state entity-level tax (so the corporation also pays NY franchise tax). Always file the CT-6.

Source: NY DTF Form CT-6

NY S corp fixed dollar minimum tax

Even after filing CT-6, a New York S corp owes a fixed dollar minimum tax based on New York receipts:

  • Receipts not over $100,000: $25
  • $100,000 to $250,000: $50
  • $250,000 to $500,000: $175
  • $500,000 to $1M: $300
  • $1M to $5M: $1,000
  • $5M to $25M: $3,000
  • Over $25M: $4,500

These are minimums. The S corp itself does not pay NY personal income tax (shareholders do, on the K-1), but the fixed dollar minimum is a flat entity-level cost.

Source: NY DTF Form CT-3-S instructions (fixed dollar minimum table for New York S corporations).

NYC General Corporation Tax and UBT

New York City imposes two business taxes that interact with entity choice:

  • General Corporation Tax (GCT): since 2015 the GCT applies to S corporations only. NYC does not recognize the federal S election, so an S corp doing business in the city pays GCT at 8.85 percent of entire net income (or the capital or alternative base if higher, with its own fixed dollar minimum of $25 to $5,000 by NYC receipts). Resident shareholders also pay NYC personal income tax on the K-1.
  • Business Corporation Tax (BCT): C corporations doing business in the city pay the BCT instead of the GCT.
  • Unincorporated Business Tax (UBT): 4 percent for unincorporated entities (sole props, single-member LLCs, partnerships). Does not apply to corporations.

For an NYC operator, the comparison is roughly: single-member LLC pays 4 percent UBT plus NY/NYC personal tax. S corp pays 8.85 percent GCT plus NY/NYC personal tax on the K-1. C corp pays the NYC Business Corporation Tax plus 6.5 to 7.25 percent NY state corporate tax plus dividend tax.

Source: NYC Department of Finance GCT; NYC UBT

NY PTET workaround

New York adopted Pass-Through Entity Tax (PTET) in 2021. S corps and partnerships may elect to pay an entity-level tax on shareholder share of NY-source income, ranging from 6.85 percent up to 10.9 percent depending on income. The shareholders receive a corresponding NY personal income tax credit, while the entity-level tax is deductible federally, sidestepping the federal SALT cap ($40,400 for 2026 under IRC 164(b)(7) per the IRS, reduced toward a $10,000 floor once modified AGI exceeds $505,000).

The federal value of the election depends on each shareholder's bracket and on how much of their personal SALT deduction the cap already allows. Election deadline is March 15 of the tax year. Once made, the election applies for the year and may be made annually.

Source: NY DTF Pass-Through Entity Tax (PTET)

Sources

Educational only. NY S corp mechanics are detailed; consult a NY CPA before making the CT-6 or PTET election.

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Updated 2026-06-19