How NY Forward Works
NY Forward supports villages, hamlets, and neighborhood-scale downtowns through a community planning process. Communities apply through their Regional Economic Development Council, and selected communities develop a strategic investment plan that identifies projects aligned with local revitalization goals.
For property owners, developers, nonprofits, and public entities, this creates an opportunity to secure funding for projects that can have a meaningful impact on both individual properties and the surrounding community. Importantly, projects are often identified through a public call for proposals, making early involvement critical while the community is shaping its investment plan.
There are also several practical considerations for private-sector project sponsors. Depending on the community’s local process and the type of project, sponsors may need to meet minimum project-cost and matching-fund requirements, demonstrate site control and financial readiness, and finance eligible costs before receiving reimbursement.
For larger renovation and construction projects, additional requirements may apply, including compliance with the program’s decarbonization standards. As with any incentive program, understanding these requirements early can help applicants avoid delays and position their projects for success.
The Tax Planning Issue Many Applicants Miss
While eligibility requirements and financing needs are usually well understood, the tax implications of a grant often receive far less attention.
For most for-profit businesses, the starting assumption should be that a NY Forward award is taxable income at the federal level. Government grants are not automatically tax-free, and many recipients are surprised to learn that tax consequences can reduce the overall benefit of an award.
New York tax treatment will depend on the recipient’s entity type and applicable state tax rules, so the state impact should be evaluated separately rather than assumed.
Timing Can Create Additional Challenges
The planning considerations extend beyond how much tax may be owed.
In many cases, grant income is recognized before the associated project costs generate tax deductions. While the grant may create taxable income in one year, the building improvements it helps fund are often recovered gradually over time through depreciation.
As a result, businesses may face a situation where the tax is due before they fully realize the tax benefits of the related project costs. Without proper planning, that timing mismatch can create unexpected pressure on cash flow and project budgets.
Plan Before You Submit a Project Proposal
A little planning on the front end can help protect the value of the award.
Before submitting a project proposal during the selected community’s strategic planning process, consider:
- Modeling the after-tax benefit of the award and incorporating that figure into project budgets and financing plans.
- Reserving cash for both the reimbursement timing gap and any resulting tax liability.
- Maintaining clear records that distinguish capital improvements from current expenses.
- Documenting eligibility requirements, matching funds, and site control.
- Evaluating how NY Forward funding may interact with other available tax credits and incentives.
The organizations that get the most value from these programs tend to view tax planning as part of the application process, not as a cleanup exercise after funding has already been awarded.
How Bonadio Can Help
The Bonadio Group can help organizations evaluate the after-tax value of a NY Forward award, assess financing considerations related to reimbursement timing, coordinate available tax credits and incentives, and establish processes for tracking eligible project costs. If you are considering a NY Forward project, it’s worth having those discussions before the proposal is finalized.
If you have any questions or are interested in learning more, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
