Form IT-651: Instructions for the Recovery Tax Credit (Tax Year 2025)

Form IT-651 is the New York State tax form used to claim the Recovery Tax Credit, a credit designed for employers who hire individuals recovering from substance use disorder. The New York State Department of Taxation and Finance issues this form along with a set of instructions (IT-651-I) that walk filers through eligibility rules, calculation steps, and documentation requirements for the 2025 tax year.

This credit exists to encourage businesses to give a second chance to workers coming out of addiction treatment programs. If your company employs someone who meets the state’s definition of a “qualified employee in recovery,” you may be able to reduce your New York tax liability based on wages paid during the tax year. The credit isn’t automatic — you have to actively claim it by filing this form with your state tax return.

Who Needs to File Form IT-651

You need this form if your business is a New York State taxpayer — whether a corporation, partnership, LLC, or sole proprietorship — and you employed one or more individuals who qualify as being in recovery from a substance use disorder. Eligible employees typically need to have documentation from a certified treatment provider confirming their recovery status, and the employment period has to fall within specific windows outlined in the instructions.

Partnerships and S corporations that generate this credit pass it through to their partners, members, or shareholders, who then claim their share on their own individual returns. If you’re a partner or shareholder receiving a share of this credit, you’ll still need to reference Form IT-651 to understand how the credit was calculated and how to report it correctly.

When to Use This Form

You file Form IT-651 with your New York State income tax return for the year in which you paid wages to a qualifying employee in recovery. Since the credit is tied to the tax year in which wages were paid, you can’t retroactively apply it to prior years without amending previous returns. For the 2025 tax year, this means wages paid to eligible employees during that calendar year are what count toward the credit calculation.

Employers who work with recovery-focused staffing programs or community organizations that place individuals in recovery into jobs are the most common users of this credit. If your business already participates in workforce development incentives, this credit can often be combined with other state tax credits, though each has its own eligibility criteria and calculation method, so they shouldn’t be confused with one another.

How to Get and Complete Form IT-651

Form IT-651 and its instructions are available directly from the New York State Department of Taxation and Finance website as a PDF. Unlike some newer state tax forms, this one is not digitally fillable — you’ll need to print it out and complete it by hand using a pen. Make sure to use black or blue ink and write clearly, since the state processes these forms manually in many cases.

Before filling it out, gather documentation proving the employee’s recovery status, payroll records showing wages paid, and any certification paperwork required by the instructions. The IT-651-I guide breaks down each line of the form, including how to calculate the credit amount based on a percentage of wages paid, subject to any caps or limitations specified for the tax year.

Once completed, attach Form IT-651 to your New York State tax return when you file. Keep copies of all supporting documentation for your records, since the department may request verification of the employee’s recovery status or the wages paid during an audit or review.

If your business claims multiple New York tax credits, it’s worth reviewing related instructions like those for the Hire a Veteran Credit or the Employee Training Incentive Program Tax Credit, since some employers qualify for more than one workforce-related credit in the same tax year. Businesses involved in START-UP NY programs might also want to check the START-UP NY Telecommunication Services Excise Tax Credit instructions to see if additional incentives apply to their situation.

Because this form must be filled out manually, double-check all calculations before submitting your return. Errors on paper forms take longer to correct than those filed electronically, and any mismatch between the credit claimed and the supporting documentation can delay processing or trigger a request for additional information from the state.