New York State Taxes

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 taxes can be a bit of a maze, whether you’re living in the city or upstate. Between state income taxes, local add-ons, and sales taxes that seem to pop up everywhere, it’s easy to feel overwhelmed. But don’t worry, this guide breaks it all down in plain English, so you’ll know what to expect and how to stay on top of your New York tax game.

New York State Taxes: 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 for residents to 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 Taxes & 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 Taxes – 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

Common New York State Tax Forms

When you’re filing your New York State taxes, it’s helpful to know which form you actually need. Here’s a quick rundown of the most common forms New Yorkers use when it’s time to deal with the state tax department.

Form IT-150 – Resident Income Tax Return (Short Form)
This is the short and simple version of the New York State tax return. It’s designed for full-year residents with straightforward income situations—usually people who only have wages, unemployment, or interest income. If your tax situation is pretty basic, this form will save you time and effort.

Form IT-201 – Resident Income Tax Return (Long Form)
This is the more detailed version of the return for full-year residents. You’ll need this if you have more complex income sources, like capital gains, self-employment income, or if you want to claim specific credits and deductions that aren’t covered by the short form. It’s also the go-to form if you itemize deductions for the state.

Form IT-203 – Nonresident and Part-Year Resident Income Tax Return
If you didn’t live in New York for the full year, or if you live in another state but earned income in New York, this is the form you’ll file. It lets you report only the income that’s taxable to New York and helps figure out how much of your total income is subject to state tax.

Form IT-2105 – Estimated Income Tax Payment Voucher for Individuals
This form is for folks who don’t have enough tax withheld from their income during the year—like freelancers, gig workers, or people with investment income. It helps you make estimated quarterly payments so you don’t end up with a big tax bill in April.

Form IT-370 – Application for Automatic Six-Month Extension of Time to File
Need a little more time to file your New York State return? This form gives you an automatic six-month extension, as long as you send it in by the original due date and pay any taxes you owe. Just remember—it extends your time to file, not your time to pay.

Form IT-150-X – Amended Resident Income Tax Return (Short Form)
If you filed Form IT-150 but later realized you made a mistake or left something out, this is the form you’ll use to fix it. It’s basically the redo version of the short form and lets you make corrections without having to start from scratch.

Form IT-201-X – Amended Resident Income Tax Return (Long Form)
Similar to the IT-150-X, this one is used if you need to amend a previously filed IT-201 return. Whether you forgot a deduction or received a corrected tax form after filing, this is where you make it right with the state.

Form IT-2 – Summary of W-2 Statements
This form summarizes your W-2 wage information for the state and should be submitted with your return if you’re mailing it in. If you’re e-filing, your tax software usually handles this part automatically, but it’s still good to know what it’s for.

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: tax.ny.gov/online/
• NYC Finance ‘Online Payments’ center: tax.ny.gov/pay/ind/pay_income_tax_online.htm
• New York State’s Tax Freedom Day is April 25th.

 

New York State Taxes: FAQ

1. Do I have to file a New York State tax return if I don’t live there full time?
If you earned income in New York but don’t live there full time, you might still need to file as a nonresident. This usually applies to people who work in the state, own rental property there, or have other New York-based income. New York is strict about residency and source income rules, so even part-year or nonresidents can be on the hook for filing.

2. How do New York State tax brackets work?
New York uses a progressive system, which means tax rates increase as your income goes up. The lowest rate is just over 4%, and it can go up to more than 10% if you’re a very high earner. The bracket your income falls into will determine how much of it is taxed at each rate. You don’t pay the top rate on your entire income, just the part that falls into that range.

3. What’s the difference between New York State tax and New York City tax?
New York State income tax applies to everyone who lives in or earns money in the state. New York City has its own income tax on top of that, and only residents of the city pay it. The NYC tax rates are also progressive and range from around 3% to 4%. So if you live in Manhattan, Brooklyn, Queens, the Bronx, or Staten Island, you’re likely paying both.

4. How do I pay estimated taxes to New York if I’m self-employed?
If you’re self-employed or earn income without tax withholding, you’ll need to make quarterly estimated payments to New York State. You can do this online through the state’s tax portal, and you’ll use Form IT-2105 to figure out how much you owe each quarter. Missing these payments can lead to penalties, so it’s best to stay on schedule.

5. What if I can’t pay my New York taxes in full?
If you can’t pay everything at once, New York does allow payment plans. You can apply for an installment agreement through the state’s Department of Taxation and Finance website. Just be aware that interest and penalties may still apply while you’re paying it off, so it’s best to pay as much as you can up front if possible.

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