CT-638: START-UP NY Tax Elimination Credit (2025)
New York · NY DTF · Used for tax years 2025
Form CT-638 is used by corporations to report the New York START-UP NY Tax Elimination Credit and related allocation factors. For C corporations, it calculates the credit and the amounts used, refunded, or applied as an overpayment to next year’s tax. It is filed with Form CT-3,
Who files this form
Form CT-638 is for corporations claiming the START-UP NY Tax Elimination Credit.
- C corporations: Use this form to claim a credit you earned or a share of the credit received as a corporate partner from a partnership.
- New York S corporations: Use this form if you earned the credit directly.
- New York S corporations claiming through a partnership: Do not complete CT-638. Instead, use Form CT-34-SH, New York S Corporation Shareholders’ Information Schedule, to report the partnership’s allocation factor.
What you'll need
Have the following forms and information ready for the sections that apply to you:
- Form DTF-74, Certificate of Eligibility: You need the certificate number and sponsor name or names.
- Your corporation’s information: Legal name, EIN, tax period beginning and ending dates, and year of the START-UP NY business tax benefit period, from 1 to 10.
- Your franchise tax return: Form CT-3, CT-3-A, or CT-3-S, including relevant tax and other credit amounts.
- Property and employee compensation figures: Schedule A asks for average property values and wages, salaries, and other compensation in the tax-free NY area and New York State. Schedule B asks for New York State and everywhere amounts.
- Partnership information, if applicable: Your share of partnership income allocated to New York State, the partner’s business income allocated to New York State, and the partnership allocation factor.
How to file
File CT-638 with Form CT-3, CT-3-A, or CT-3-S.
All filers must enter the tax period and complete line A to show whether they earned the credit directly.
Complete the applicable sections:
- C corporation that earned the credit: Lines B, C, and D, plus Schedules A, C Part 1, D, and E.
- C corporation claiming as a corporate partner: Lines B, C, and D, plus Schedules C Part 2, D, and E.
- New York S corporation that earned the credit: Lines B, C, and D, plus Schedules A and B.
The supplied form does not provide a mailing address or e-filing directions.
Common mistakes
- Leaving required entries blank: All filers must enter their tax period and complete line A.
- Completing the wrong schedules: C corporations do not complete Schedule B. New York S corporations do not complete Schedules C or E.
- Using CT-638 for an S corporation’s partnership credit: The form directs these corporations to use CT-34-SH instead.
- Missing rounding directions: Round the factors on lines 2, 4, 6, 8, 10, 13, and 22 to the fourth decimal place.
- Exceeding printed limits: Line 22 cannot exceed 1.0. The refund on line 34 cannot exceed the unused credit on line 33.
Questions people ask
Where do I find my certificate number and sponsor names?
Use Form DTF-74, Certificate of Eligibility, issued to the approved START-UP NY business.
What do I enter for the business tax benefit period?
Line D asks for the year of your START-UP NY business tax benefit period, entered as a number from 1 to 10.
How is the total credit calculated?
In Schedule D, multiply the allocation factor on line 24 by the tax factor on line 25. Enter the result on line 26.
Can unused credit be refunded or applied to next year’s tax?
Schedule E provides for both options. Line 33 calculates unused credit, line 34 records the amount to be refunded, and line 35 records the remainder to apply as an overpayment to next year’s tax. New York S corporations do not complete Schedule E.