In a significant development for the real estate and construction industries, Governor Kathy Hochul has approved a four-year extension of the Industrial Commercial Abatement Program (ICAP), extending crucial tax incentives to commercial developers through 2029. The decision, made quietly and without a formal announcement, comes despite external pressure advocating for the program’s rejection.

The ICAP program offers valuable tax abatements to developers of new or substantially renovated commercial properties, lasting 15 to 25 years depending on the scope of the project. To qualify, developers must meet the “Minimum Required Expenditure,” which requires an investment of at least 30% of the property’s pre-construction assessed value. ICAP shields developers from increases in assessed property values for up to four years, spanning from the issuance of permits until the Final Certificate of Occupancy is granted.

Before this extension, the deadline for submitting a preliminary application for ICAP benefits was March 1, 2025 and with the newly approved extension, the deadline has been pushed to March 1, 2029, providing developers with a longer window to initiate qualifying projects.

This extension is a welcome development for stakeholders in New York City’s commercial real estate market, offering continued opportunities to mitigate rising tax burdens while incentivizing growth and modernization across the city. For developers, understanding these shifts and planning accordingly can unlock substantial savings over the lifespan of a project. Firms looking to take advantage of ICAP’s benefits should consider consulting with experienced tax advisors to ensure compliance with program requirements and deadlines.