Form IT-638: START-UP NY Tax Elimination Credit (Tax Year 2025)

Form IT-638 is how eligible businesses and individuals claim the START-UP NY Tax Elimination Credit, a benefit tied to New York’s START-UP NY program. This initiative lets qualifying businesses operate tax-free for a set period when they locate on or near eligible university or college campuses across the state. The credit essentially wipes out New York State personal income tax or corporation franchise tax liability attributable to income earned through an approved START-UP NY business.

The New York State Department of Taxation and Finance issues this form, and it applies specifically to tax year 2025 filings. If your business was accepted into the START-UP NY program and received a certificate of eligibility from Empire State Development, this is the form that translates that approval into an actual tax benefit on your return.

Who Needs Form IT-638

You need this form if you’re a business owner, partner, shareholder, or sole proprietor whose company operates under an approved START-UP NY business agreement. The credit flows through to individual owners of pass-through entities like partnerships and S corporations, as well as to standalone C corporations filing under Article 9-A. Employees of START-UP NY businesses also benefit separately through wage exclusions, but that’s handled differently from this credit.

To qualify, your business must have signed a formal agreement with a sponsoring college or university and received official certification confirming your tax-free status for the applicable year. Without that certification, you can’t claim this credit no matter how similar your business circumstances might seem.

When You Use It

You file Form IT-638 alongside your regular New York State income tax return for the year you’re claiming the benefit. For most businesses, that means submitting it with your annual return covering tax year 2025, whether you’re an individual reporting pass-through income or a corporation filing separately. Because START-UP NY benefits phase in gradually and eventually taper off according to a fixed schedule, you’ll need to reference this form each year you remain within your approved tax-free period, since the elimination percentage can change from year to year based on your agreement terms.

Businesses transitioning out of the tax-free period, or those in later years of reduced benefits, still use this form but report a partial credit rather than a full elimination. The form’s instructions walk through how to calculate the applicable percentage based on how many years you’ve participated in the program.

How to Get and Complete Form IT-638

The form is available directly from the New York State Department of Taxation and Finance website as a fillable PDF, meaning you can enter your information digitally before printing or submitting electronically through approved tax software. You’ll need your Empire State Development certification number, details about your sponsoring campus, and figures showing your New York source income for the tax year.

Filling it out requires cross-referencing your certified benefit period, since the elimination percentage isn’t a flat rate for every business—it depends on where you are in your approved multi-year schedule. Most tax preparers familiar with New York State credits can handle this without much difficulty, but if you’re preparing your own return, read the line-by-line instructions carefully before entering numbers, since errors here can delay processing or trigger a request for supporting documentation from the state.

If you’re also researching other state-specific credits, it’s worth comparing how New York structures incentives like this against programs elsewhere. For instance, California’s historic rehabilitation credit follows a completely different eligibility structure, while businesses dealing with net operating losses might also want to look at how NOL computations work in California for context on multi-year carryforward rules. And if your START-UP NY business also hires young workers, you may qualify for the New York Youth Jobs Program Tax Credit as an additional benefit alongside this one.

Keep copies of your Empire State Development certification and any correspondence confirming your program status, since the Department of Taxation and Finance may request these documents to verify your claim before finalizing your refund or credit application.