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 the NYC General Corporation Tax for corporations operating in the city, plus the MTA surcharge in the New York Metropolitan Commuter Transportation District, and New York becomes one of the more complex S corp states.
Updated May 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 (or 7.25 percent for tax years 2021-2026 if net income exceeds $5M) 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 Tax Law Section 209(1); verify current brackets at the NY DTF.
NYC General Corporation Tax and UBT
New York City imposes two business taxes that interact with entity choice:
- General Corporation Tax (GCT): 8.85 percent on corporate net income for C corps and S corps. NYC does not recognize the federal S election. S corp shareholders pay NYC personal income tax on the K-1 AND the corporation pays 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 8.85 percent GCT 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 (bypassing the $10,000 SALT cap).
For a NY S corp with significant income, PTET election may save federal tax in excess of $30,000 annually for the shareholders combined. Election deadline is March 15 of the tax year. Once made, the election applies for the year and may be made annually.
Sources
Educational only. NY S corp mechanics are detailed; consult a NY CPA before making the CT-6 or PTET election.