IT-223: Innovation Hot Spot Deduction (2025)
New York · NY DTF · Used for tax years 2025
New York Form IT-223 reports income or gain attributable to operations in an innovation hot spot for the Innovation Hot Spot Deduction. It lists the qualified entities, hot spot details, and amounts used to claim subtraction modifications on Form IT-225.
Who files this form
Complete Form IT-223 if you are an individual, a fiduciary of an estate or trust, a partner in a partnership, or a shareholder of a New York S corporation, and you are a qualified entity or a member, partner, or shareholder of one, or both. Include all entities from which you receive income or gain attributable to an innovation hot spot.
A partnership must submit IT-223 with Form IT-204, showing its total income or gain attributable to the hot spot, and provide each partner with their share.
A New York S corporation does not file IT-223. It must file Form CT-223 instead. Its shareholders use the information provided by the corporation to claim their subtraction modification.
What you'll need
Have these records and details available to complete the form:
- Names and identifying numbers as shown on your return.
- Your certificate letter, which supplies the hot spot name, identification code, and business participation number.
- The EIN of the qualified business certified in the hot spot.
- The deduction year you are claiming: 1, 2, 3, 4, or 5.
- The income or gain attributable to the hot spot that you included in federal adjusted gross income.
- Your share of hot spot income or gain provided by a partnership or New York S corporation, if applicable.
A qualified entity located both inside and outside a New York innovation hot spot must keep books and records showing the income, gain, loss, and deductions attributable to hot spot operations.
How to file
Submit Form IT-223 with Form IT-201, IT-203, IT-204, or IT-205, as applicable.
- Enter your name and identifying number as shown on your return.
- Complete columns A through F for all relevant entities. If income comes through another entity, column D must show the EIN of the qualified entity certified in the hot spot.
- Add the column F amounts received as the qualified entity. Transfer that total to Form IT-225, line 10, in the Total amount column, and enter S-216 in the Number column.
- Separately add the column F amounts received as a partner or shareholder of a qualified entity. Transfer that total to Form IT-225, line 14, in the Total amount column, and enter ES-216 in the Number column.
The supplied text does not give a mailing address or e-filing instructions.
Common mistakes
- Entering more than one deduction year in column E. Make only one entry: 1, 2, 3, 4, or 5.
- Claiming overlapping New York State tax benefits. If you claim the listed innovation hot spot benefits, you cannot claim other New York State exemptions, deductions, credits, or refunds to the extent they are attributable to the hot spot business operations.
- Overlooking the permanent election. Claiming any of the listed benefits makes an irrevocable election, meaning it cannot be reversed.
Questions people ask
How long are innovation hot spot tax benefits available?
Qualified entities are eligible for five tax years, beginning with the year the entity became a tenant in, or part of, an innovation hot spot.
What amount goes in column F?
Enter the income or gain attributable to the hot spot that you included in your federal adjusted gross income.
Which EIN do I use if I receive income through another entity?
Use the EIN of the qualified entity certified in the hot spot, even if you receive the income through a partnership, New York S corporation, estate, or trust.
Where can I learn more about the program?
The form directs readers to www.esd.ny.gov for more information about the New York Innovation Hot Spot Program.