New York has three major sources of tax revenue ― the Personal Income Tax, the Corporation Tax, and the Sales/Use Tax. These, plus Property Taxes and other local levies, round out the structure of New York’s tax system.
New York State Tax ― Personal Income Tax
New York is a state that allows its chief city (New York City) to impose its own income tax beyond the state and federal income tax.
New York State Income Tax
New York State has 7 different brackets for income tax rates:
- 4% on the first $8,000 of taxable income
- 4.5% on taxable income between $8,001 and $11,000
- 5.25% on taxable income between $11,001 and $13,000
- 5.9% on taxable income between $13,001 and $20,000
- 6.85% on taxable income between $20,001 and $200,000
- 7.85% on taxable income between $200,001 and $500,000
- 8.97% on taxable income of $500,001 or more
There are 5 filing statuses recognized by the state of New York: Single, Married Filing Separately, Married Filing Jointly, Head of Household, and Qualifying Widow(er) with Dependent Child. In most cases, a taxpayer must use the same filing status on their state tax return as their federal return.
Nonresidents must pay a New York State income tax if they have income sourced from New York. For this computation, a base tax (using the same rates as residents) is multiplied by their ratio of AGI (annual gross income) derived from New York.
New York City Income Tax
New York City imposes its own income tax on its residents (income-earning individuals, estates, and trusts), which are collected for the City by the NY State Department of Taxation and Finance. There is no separate tax return ― residents fill in the New York City sections of the State income tax form and then mail it to Albany, NY by April 15th.
New York City has 4 brackets for income tax rates:
- 2.907% on income of $12,000 or less
- $349 plus 3.534% of income between $12,001 and $25,000
- $808 plus 3.591% of income between $25,001 and $50,000
- $1,707 plus 3.648% of income of $50,001 or more
New York State Tax ― Corporate Tax
The state Corporation Franchise Tax applies to general business corporations (including C corporations and S corporations) for the privilege of doing business in New York State. There are 4 ways to calculate this tax. Whichever method produces the greatest amount of tax is what the corporation must use:
- 7.1% of entire net income allocated to NY
- 0.178% of business & investment capital allocated to NY, not to exceed $350,000
- 2.5% of minimum taxable income
- A fixed dollar minimum tax, with a $1,500 maximum
The city General Corporation Tax (GCT) is imposed on all corporations (foreign and domestic) that conduct business, employ capital, and own, lease, or maintain property in New York City. There are 4 ways to compute this tax, and whichever produces the largest amount is what the corporation must use:
- Entire net income base: 8.85% of net income allocated to NYC
- Total capital base: 0.15% of business & investment capital allocated to NYC, not to exceed $350,000
- Alternative tax base: 8.85% of 30% of net income, along with the amount of compensation paid to an individual who owned 5% or more capital stock
- Minimum tax base of $300
New York State Tax ― Sales & Use Tax
Although New York City has some of its own tax laws, they do not simply cancel out state tax laws. In cases such as the sales/use tax, City tax rates are enforced in addition to State taxes.
The sales/use tax has 2 parts: the sales tax and the use tax (or “compensating tax”). The sales tax is a tax on tangible personal goods, paid as part of the sales transaction. The use tax is more like a quiet counterpart, paid after-the-fact to the state, for goods or services not covered by the sales tax. The use tax also applies to merchandise that is purchased out-of-state and brought into the state for use or consumption.
Sales tax on a retail purchase is computed using 3 components: the New York State sales tax rate, the local/county sales tax rate, and the Metropolitan Commuter Transportation District (MCTD) sales tax:
- New York state sales tax rate is 4%. In general, this applies to tangible personal property, certain services, electricity, food and drink, and hotel/motel room charges.
- Local sales tax rates range from 3% to 4.5%. These local taxes are imposed in addition to the state tax of 4%.
- Metropolitan Commuter Transportation District (MCTD) tax is 0.375% for businesses that operate in participating counties.
New York City’s local sales tax rate is 4.5%. That, added to the state rate of 4% and the MCTD rate of 0.375%, equals a total of 8.875% sales tax for the city:
- 4% (State) + 4.5% (City) + 0.375% (MCTD) = 8.875% Total
New York State Tax Forms
Form IT-150 (Resident Income Tax Return ― short form)
Form IT-201 (Resident Income Tax Return ― long form)
Form IT-203 (Nonresident and Part-Year Resident Income Tax Return)
Form IT-2105 (Estimated Income Tax Payment Voucher for Individuals)
Form IT-370 (Application for Automatic Six-Month Extension of Time to File for Individuals)
Form IT-150-X (Amended Resident Income Tax Return ― short form)
Form IT-201-X (Amended Resident Income Tax Return ― long form)
Form IT-2 (Summary of W-2 Statements)
New York State Tax Resources
New York State Department of Taxation and Finance: www.tax.state.ny.us
New York City Department of Finance: www.nyc.gov/html/dof
New York City Tax Commission: www.nyc.gov/taxcomm
NY State Department of Taxation and Finance “Online Services” center: www.tax.state.ny.us/online
NY State Department of Taxation and Finance ― Make a payment: www.tax.state.ny.us/pit/income_tax/make_a_payment
NY State Department of Taxation and Finance “E-file” webpage: www.tax.state.ny.us/elf
Check the status of your NY state tax refund: www8.nystax.gov/PRIS
NYC Finance “e-File” portal: www.nyc.gov/dof/e_file
NYC Finance “Online Payments” center: www.nyc.gov/dof/payments
New York State’s Tax Freedom Day is April 25th.