What Is Tax at Normal Rates on Line 15 of Part B-TI?

The tax at normal rates on Line 15 of Part B-TI is the franchise tax on a corporation’s business income base, calculated by multiplying its apportioned business income by the applicable rate on New York’s Form CT-3. For most general business corporations filing in 2026, that rate is 6.5%. Corporations with a business income base above $5 million pay 7.25% instead. The Line 15 figure is not necessarily the tax the corporation owes, because New York compares it against two other calculations and collects the highest.

What Line 15 Represents

Line 15 sits at the end of the business income base computation on Part B-TI. Everything above it works toward one number: the corporation’s apportioned business income, adjusted from federal taxable income and scaled to New York activity. Line 15 applies the franchise tax rate to that number and produces the tax on the business income base.¹

The math itself is simple. Multiply the apportioned business income base by the rate that applies to the corporation. If the base is $2 million and the rate is 6.5%, Line 15 is $130,000. If the base is $6 million, the 7.25% rate applies to the entire base and Line 15 becomes $435,000, rather than $390,000 at the lower rate. Verifying which tier applies is worth the time.

The Rate That Applies in 2026

For tax years beginning in 2026, New York applies a two-tier rate structure to most general business corporations:

6.5% for corporations with a business income base of $5 million or less.²
7.25% for corporations with a business income base above $5 million. This rate applies to tax years beginning on or after January 1, 2021 and before January 1, 2027, so it is still in effect for 2026 filings.²

The 7.25% rate applies to the entire base once the corporation crosses the $5 million threshold after apportionment, not only to the excess. That cliff catches corporations that assume they pay the widely cited 6.5%.

Reduced Rates for Qualifying Corporations

Several categories of corporations pay something other than the standard rate.

Qualified New York manufacturers pay 0% on the business income base. A manufacturer qualifies by deriving more than half of its gross receipts from manufacturing, processing, assembling, farming, mining, or similar activities, and by holding qualifying property in the state worth at least $1 million or having all of its property located in New York. Very large manufacturers that don’t meet the receipts test can still qualify by employing at least 2,500 manufacturing workers in the state and holding at least $100 million in qualifying manufacturing property.³

Qualified emerging technology companies pay a reduced rate of 4.875% on the business income base.⁴

Small business taxpayers pay the standard 6.5% on the business income base but 0% on the capital base. A corporation qualifies as a small business taxpayer with entire net income of $390,000 or less, aggregate capital of $1 million or less, and no more than 100 full-time employees in New York.²

How the Income Base Gets to Line 15

Two moves shape the number that Line 15 multiplies against the rate.

First, the corporation starts with federal taxable income from Form 1120 and applies the additions and subtractions required by New York Tax Law Section 208 to arrive at “entire net income.”⁵ Common additions include state and local income taxes deducted federally, federal net operating loss deductions, and bonus depreciation that New York does not conform to. Common subtractions include certain dividend income and income taxed by other jurisdictions where New York provides relief. A missed addition inflates a refund; a missed subtraction inflates the tax. Both draw audit attention, and every calculation downstream depends on getting these adjustments right.

Second, on Line 4 of Part B-TI, a corporation operating in more than one state applies the business apportionment factor. New York uses market-based sourcing: receipts are assigned to wherever the customer receives the benefit of the service or wherever tangible property is delivered.¹ A corporation earning $10 million nationwide with $3 million from New York customers has a 30% factor and pays New York tax on 30% of the adjusted base. A five-percentage-point error in the factor moves the tax bill more than a rate change would, so where receipts are sourced deserves close attention.

Why Line 15 May Not Be the Tax the Corporation Owes

Every C corporation filing Form CT-3 (other than S corporations) must run three separate tax calculations and pay the highest:²

The business income base tax. This is the Line 15 amount.
The capital base tax. For general business taxpayers in 2026, this is 0.1875% of business capital allocated to New York, capped at $5 million. Small business taxpayers, qualified manufacturers, and qualified emerging technology companies pay 0% on the capital base. The capital base tax is scheduled to drop to 0% for all taxpayers starting in tax year 2027.⁴²
The fixed dollar minimum. A flat amount based on New York receipts, starting at $25 for receipts of $100,000 or less. Every corporation owes at least this amount regardless of profitability.

Whichever of the three is highest goes onto Part 2, Line 2 of the CT-3.¹ For profitable corporations with meaningful New York operations, Line 15 almost always produces the largest number and becomes the effective tax. Corporations operating at a loss or on thin margins sometimes find the capital base or fixed dollar minimum higher, and the Line 15 amount is set aside.

So Line 15 is one input into the final tax, not the final tax itself. Compute it correctly, then run the comparison.

1
New York State Department of Taxation and Finance. Instructions for Form CT-3 General Business Corporation Franchise Tax Return
2
New York State Senate. New York Tax Law 210 – Computation of Tax
3
New York State Senate. New York Code TAX 210 – Computation of Tax
4
New York State Department of Taxation and Finance. Definitions for Article 9-A Corporations
5
New York State Senate. New York Code TAX – Definitions