New York State has a progressive income tax system with rates ranging from 4% to 10.9%

New York State taxes your income on a sliding scale. The more you earn, the higher percentage of your income goes to the state. The lowest rate is 4% on the smallest incomes, and the highest is 10.9% on the largest. You do not pay 10.9% on all your income — you pay the lower rates on the lower portions and only the highest rate on the amount above the top threshold.

These rates explore to wages, self-employment income, and other earnings. They do not explore to capital gains (profit from selling investments), which has its own separate tax structure in New York. The rates also do not explore to Social Security benefits, which are generally not taxed by the state.

New York State tax is separate from federal income tax. You owe both. The state tax is withheld from your paycheck if you are an employee, or you pay it yourself if you are self-employed.

Key Takeaways

  • New York State income tax brackets range from 4% to 10.9%, and the rate you pay depends on your total income for the year.
  • The tax is progressive, meaning you pay lower rates on lower income and higher rates only on income above each threshold.
  • Tax brackets are adjusted each year for inflation, so the income levels that trigger each rate change annually.
  • You owe New York State tax in addition to federal income tax, and both are usually withheld from your paycheck automatically.
  • Capital gains and certain other types of income have different tax treatment and may not be subject to the standard income tax rates.

The eight tax brackets for 2024

New York State divides income into eight brackets. Each bracket has its own rate, and you pay that rate only on income that falls within that bracket. For example, if you are single and earn $50,000, you do not pay 6.5% on all of it — you pay 4% on the first portion, then 4.5% on the next portion, and so on, until your income reaches $50,000.

The brackets for 2024 are different for single filers, married couples filing jointly, and heads of household. A single person in 2024 pays 4% on income up to $8,500, then 4.5% on income from $8,500 to $11,700, then 5.85% on income from $11,700 to $13,900, and continues through higher brackets up to 10.9% on income over $21,960,000. A married couple filing jointly has higher thresholds at each bracket level, meaning more income falls into the lower-rate brackets.

These bracket thresholds change each year. The state adjusts them for inflation, so the dollar amounts that define each bracket shift upward annually. This means your tax rate can stay the same even if your income rises, as long as your income does not cross into a higher bracket.

How tax withholding works on your paycheck

If you are an employee, your employer withholds New York State income tax from your paycheck based on the information you provide on Form IT-2104, the New York State Employee's Withholding Allowance Certificate. This form tells your employer how much to hold back. You fill it out when you start a job and can update it if your situation changes — for example, if you get married, have a child, or take a second job.

The withholding is an estimate. It is designed to get you close to what you will actually owe when you file your tax return. If too much is withheld, you get a refund. If too little is withheld, you owe money when you file. You can adjust your withholding by filing a new Form IT-2104 with your employer at any time during the year.

Self-employed people and those with income not subject to withholding must pay estimated tax directly to New York State four times a year. These quarterly payments are due in April, June, September, and January.

Special tax rates for capital gains and investment income

New York State taxes long-term capital gains (profit from selling an investment you held for more than one year) at a lower rate than ordinary income. The capital gains rate depends on your total income and ranges from 0% to 10.9%. Short-term capital gains (from investments held one year or less) are taxed as ordinary income at your regular bracket rate.

Dividends from stocks and mutual funds are also taxed at the capital gains rate if they are may have access to dividends. Interest income from bonds and savings accounts is taxed as ordinary income. Rental income is taxed as ordinary income, though you can deduct expenses related to the rental property.

Tax credits and deductions that reduce what you owe

New York State offers a standard deduction that reduces your taxable income before the tax is calculated. For 2024, the standard deduction is $8,000 for single filers and $16,050 for married couples filing jointly. You can also itemize deductions if you have significant expenses like mortgage interest or charitable donations, though itemizing is only worth doing if your total deductions exceed the standard deduction.

The state also offers tax credits that directly reduce the tax you owe. The Earned Income Tax Credit (EITC) is available to lower-income workers and can result in a refund even if you owe no tax. The Child and Dependent Care Credit helps families who pay for childcare. The Empire State Child Tax Credit provides money back for each dependent child. These credits are separate from the federal versions and have their own income limits and rules.

How to file your New York State tax return

You file your New York State income tax return using Form IT-201 (for residents) or Form IT-203 (for nonresidents). The return is due on the same date as your federal return, typically April 15. You can file on paper by mailing it to the New York State Department of Taxation and Finance, or you can file electronically through the state's website or through tax software.

If you cannot file by April 15, you can request an extension, which gives you until October 15 to file. The extension gives you more time to file, but it does not extend the time to pay. If you owe tax, you should pay it by April 15 even if you file late, to avoid penalties and interest.

Many people use tax software or hire a tax preparer to file. The state's website lists approved software providers and can help you find a preparer if you need one. If your income is below a certain threshold (which changes each year), you may be able to file for free through the state's Free File program.

Nonresidents and part-year residents

If you lived in New York State for only part of the year, you file as a part-year resident and owe tax only on income earned while you were a resident. If you worked in New York but lived in another state, you may owe New York tax on wages earned in the state, even though you are not a resident. New York has reciprocal agreements with some neighboring states that can reduce or eliminate this tax, so check whether your state of residence has an agreement with New York.

Nonresidents who earned income in New York file Form IT-203 and report only the income earned in the state. You will need documentation showing when you moved into or out of New York, such as a lease, utility bill, or driver's license, to prove your residency status.

Frequently Asked Questions

What is the difference between New York State tax and federal income tax?

They are two separate taxes. Federal tax goes to the U.S. government and is calculated using federal brackets and rules. New York State tax goes to the state and uses New York's brackets and rules. You owe both, and both are usually withheld from your paycheck. Your federal return and state return are filed separately.

Do I have to pay New York State tax if I live out of state but work in New York?

Yes, generally you owe New York tax on wages earned in the state, even if you live elsewhere. However, New York has reciprocal tax agreements with Connecticut, New Jersey, and Pennsylvania that may reduce or eliminate this tax. Check your state's agreement with New York to see if you may have access to.

How do I know if I am withholding enough tax?

Review your most recent pay stub and estimate your total income for the year. Use the New York State tax calculator on the Department of Taxation and Finance website to see what you should owe. If your withholding is too low, file a new Form IT-2104 with your employer to increase it. If it is too high, you can decrease it, though many people prefer to have extra withheld to get a refund.

What happens if I do not file a New York State tax return?

The state may assess a penalty and charge interest on any tax owed. If you are owed a refund, you cannot receive it without filing. File as soon as you can, even if you cannot pay what you owe — the penalty for not filing is larger than the penalty for paying late.

Are retirement distributions taxed by New York State?

Distributions from traditional IRAs and 401(k)s are taxed as ordinary income. Distributions from Roth IRAs are generally not taxed. Pension income and Social Security benefits have special treatment — pensions may be partially exempt depending on your age and income, and Social Security is generally not taxed by New York State.