Banking Corporation Tax (BCT)

Effective for tax years beginning on or after January 1, 2015, the BCT only applies to corporations that are S corporations and qualified subchapter S subsidiaries under the U.S. Internal Revenue Code.  These corporations will continue to file BCT tax returns in tax years beginning on or after January 1, 2015 if they are otherwise taxable under the BCT.  The applicable forms have not changed.  All other corporations are now subject to tax under Subchapter 3-A of Chapter 6 of Title 11 of the Administrative Code and will file Subchapter 3-A tax returns instead of BCT returns.  For more information regarding corporate tax reform, click here.

Who Has to Pay This Tax?
Banking corporations are defined as follows:

  • Corporations or associations that are authorized to conduct banking business, including commercial and savings banks, savings and loan associations, and trust companies;
  • Bank holding companies included in combined banking corporation tax returns; and
  • Corporations owned by a bank or a bank holding company and principally engaged in a business that a bank might legally conduct or a business that is so closely related to banking or managing or controlling banks as to be a proper incident thereto.

NOTE: Provisions that are related to the Gramm-Leach-Bliley Act of 1999 (applicable in tax years beginning after 1999 and before 2006) require certain banking corporations be taxed during each of the transition years under the General Corporation Tax or the Banking Corporation Tax applied to that corporation for its immediately preceding taxable year.

These provisions also allow corporations that were formed after 1999, and that are financial subsidiaries owned by a financial holding company, to elect to be taxed under the General Corporation Tax or the Banking Corporation Tax in their first year but require them to be taxed under the tax elected for each subsequent transitional year. However, for tax years beginning in 2009, certain taxpayers who previously elected to be taxed under the General Corporation Tax based on these provisions will now be required to be taxed under the Banking Corporation Tax if certain conditions are met.

  • To calculate the alternative tax, foreign banks use the same alternative tax base, i.e. taxable assets, as domestic banks. Foreign banks are not required to calculate alternative tax based on the par value of issued common stock.
  • Credit card companies with customers having a mailing address in New York City are subject to banking corporation tax regardless of whether the credit card company has a physical location in the City.

Who is Exempt from this Tax?
The following types of corporations are exempt from banking corporation tax:

  • Trust companies wherein 20 or more savings banks that are organized under the laws of New York own all capital stock;
  • Corporations that are subject to the General Corporation Tax;
  • Real Estate Mortgage Investment Conduits (REMICs); and
  • Corporations that are subject to tax as insurance companies under Article 33 of the New York State Tax Law, other than savings and insurance banks.

Tax Rates
The banking corporation tax rate is the largest of the following four options:

  • 9% of the entire net income allocated to the City;
  • a tax of 0.1 of a mill for every dollar of taxable assets allocated to New York City, except that certain corporations with net worth ratios of less than 5% whose taxable assets are composed of 33% or more of mortgages will be subject to a lower rate, and corporations holding net worth certificates under certain provisions of the Fair National Housing Act may not be subject to taxable asset basis;
  • 3% of alternative entire net income allocated to the City;
  • $125 minimum tax.

Important Definitions Related to Tax Rate
"Entire net income" is defined as the total net income from all sources, which is the same as the entire taxable income (i) that the taxpayer is required to report to the US Treasury Department, or (ii) that the taxpayer (in the case of a corporation that is exempt from Federal income tax but subject to banking corporation tax) would have been required to report to the US Treasury but for the exemption, or (iii) that, in the case of a corporation that is organized under the laws of a country other than the United States, is effectively connected with the conduct of a trade or business within the US, subject to certain modifications.

NOTE: For the tax years beginning after 1996, S-corporations that are banking corporations must compute entire net income for bank tax purposes, as if an election under Subchapter S had not been made. In addition, banking corporation taxpayers must treat their qualified Subchapter S subsidiaries (QSSS) as separate and distinct corporations and determine income as if no (QSSS) election had been made.

"Alternative entire net income" is defined as the taxpayer’s entire net income, adjusted to eliminate the effect of certain tax benefits allowed in the calculation of entire net income.

"Taxable assets" are defined as the taxpayer’s balance sheet assets valued at their average value during the tax year, with certain exclusions and modifications.

"Allocation" - A taxpayer whose entire net income, alternative entire net income, taxable assets, or issued capital stock is derived from business that is carried on within and without the City is permitted to allocate those amounts under a formula. This formula takes into account the taxpayer’s payroll, receipts, and deposits within and without the City. The allocation, however, cannot include the issued capital stock percentage. For banking corporations that substantially provide management, administrative or distributive services to investment companies, a single receipts factor will replace the three-factor allocation formula used for tax years beginning before 2009. This begins for tax years starting in or after 2009 and is phased in over a ten-year period. Issuer's allocation percentage information is available online. The NYC Department of Finance keeps a record of the issuer's allocation percentages (IAP) for all general corporations and banking corporations.

View Allocation Percentage Reports

Forms and Reports

Filing Deadlines

  • Calendar year taxpayers must file annually, on or before March 15 of the following year.
  • Fiscal year taxpayers must also file annually, by the 15 day of the third month after the close of their fiscal year.

Paying Estimated Tax
If the preceding year’s tax was more than $1,000, the taxpayer must pay an amount equal to 25% of this tax at the time the preceding year’s tax return is filed or at the time a request for an extension is filed, as the first installment of estimated tax for the current year.

The other estimated tax payments are due as follows: 

If the requirement for filing a Declaration of Estimated Tax is first met… The due date for filing is…
Before June 1 June 15
June 1, up to August 31 September 15
September 1, up to November 30 December 15
Instead of the December 15 Declaration, a completed tax report, with payment of balance due, if any, may be filed by February 15 of the following year.

Estimated tax for fiscal year taxpayers
The corresponding months of the fiscal year should be substituted for the months specified above.

Legal Authority
Local Law: Title 11, Chapter 6 (Subchapter 3), Administrative Code Enabling Act: Chapter 772 Laws of 1966

Additional Information
Business Corporation Tax