New York's income tax rates depend on what you earn and where you live
New York State charges income tax on wages, self-employment income, and investment gains. The state uses a progressive tax system, meaning the rate increases as your income rises. For 2024, state rates range from 4% on the lowest bracket to 10.9% on income over $21.6 million. The exact rate you pay depends on your filing status (single, married filing jointly, head of household) and your total taxable income.
If you live in New York City, you also pay a city income tax on top of the state rate. City rates range from 3.876% to 3.876% for most earners, though the exact percentage varies slightly by income bracket. Combined, a New York City resident in the middle income bracket pays roughly 6.5% to 8.5% in state and city income tax together, depending on their exact earnings.
New York State does not tax Social Security benefits, retirement distributions from certain accounts, or military pensions. However, it does tax interest, dividends, and capital gains at the same rates as wages.
Key Takeaways
- New York State income tax ranges from 4% to 10.9% depending on your income bracket and filing status.
- New York City residents pay an additional city income tax of roughly 3.876%, stacked on top of the state rate.
- Sales tax in New York State is 4%, but most counties add a local sales tax, bringing the total to 7% to 8.875% depending on where you shop.
- Property tax rates vary widely by county and municipality; New York has some of the highest property taxes in the nation.
- Self-employed individuals pay both the employee and employer portions of Social Security and Medicare tax, in addition to income tax.
Sales tax rates vary by county and city
New York State charges a base sales tax of 4% on most goods and services. However, counties and cities can add their own local sales tax on top of this. The combined rate you pay at checkout depends on where you make the purchase.
In New York City, the combined state and local sales tax is 8.875%. In most other parts of the state, the total ranges from 7% to 8.875%. Some counties charge the state minimum of 4% plus a smaller local add-on, while others add the maximum allowed. For example, Westchester County has a combined rate of 8.875%, while some rural counties may be closer to 7%.
Groceries, prescription medications, and certain medical equipment are generally exempt from sales tax. Clothing under $110 per item is also exempt in New York State.
Property tax rates are set by your municipality
New York has no statewide property tax rate. Instead, each town, city, and school district sets its own rate based on local budgets and property values. Property taxes in New York are among the highest in the nation, with an average effective rate around 1.7% of home value statewide, though this varies significantly by location.
A home worth $300,000 in one county might have a property tax bill of $3,000 to $7,000 per year, depending on the municipality. The same home in a different county could be substantially higher or lower. You can find your local rate by contacting your town assessor's office or checking your property tax bill.
Property tax bills are due on specific dates that vary by municipality, usually in the fall and spring. Homeowners over 65 with limited income may be may be able to access for a property tax exemption or reduction through the STAR program (School Tax Relief), though income limits explore.
Self-employment and business income taxes
If you are self-employed, you pay New York State income tax on your net business income at the same progressive rates as wage earners. You also pay self-employment tax to the federal government, which covers Social Security and Medicare. This is 15.3% of your net earnings (12.4% for Social Security, 2.9% for Medicare), though you can deduct half of it when calculating your income tax.
New York State does not have a separate self-employment tax, but some cities and counties have business taxes or gross receipts taxes. New York City, for example, charges a business income tax on self-employed individuals and small business owners. The rate depends on your net income and business structure.
Keep records of all income and expenses throughout the year. Self-employed individuals typically need to make quarterly estimated tax payments to both New York State and the federal government to avoid penalties.
How to find your exact tax bracket
Your tax bracket is determined by your filing status and total taxable income. New York publishes tax tables each year that show the exact amount of tax owed at each income level. You can find these on the New York Department of Taxation and Finance website.
To find your bracket, add up all your income sources (wages, self-employment, interest, dividends, capital gains) and subtract any deductions you are may have access to to claim. Then look up that number in the tax table for your filing status. The table will show you the exact state tax owed.
If you have a complex tax situation — multiple income sources, rental property, investments, or business ownership — consider consulting a tax professional. Many offer free initial consultations and can help you understand your obligations and find deductions you might have missed.
Special taxes and surcharges in New York
In addition to income and sales tax, New York has several other taxes that may affect you. The state charges an estate tax on inheritances over a certain amount (currently $6.94 million for 2024), though this only applies to very large estates. New York also taxes gasoline, cigarettes, and alcohol at rates higher than many other states.
New York City has a congestion pricing program that charges drivers a toll to enter Manhattan below 60th Street during peak hours. The toll is $15 for most vehicles during peak hours and $5.76 during off-peak hours, though this program was paused and may change.
Renters do not pay property tax directly, but landlords pass some of the cost along through rent. If you rent in New York, you may be may be able to access for a property tax exemption or rent increase limitation depending on your income and the building's status.
Frequently Asked Questions
What is the difference between state and federal income tax?
New York State income tax goes to the state government and funds state services like education and infrastructure. Federal income tax goes to the U.S. government and funds national programs. You pay both — they are separate taxes calculated on the same income. Your employer withholds both from your paycheck.
Do I have to pay New York taxes if I work remotely for an out-of-state company?
Yes, if you live in New York and work remotely, you owe New York State income tax on your wages regardless of where your employer is located. New York taxes income earned by residents, not just income earned within the state. However, if you live outside New York and work remotely for a New York company, you generally do not owe New York State tax.
Are there any deductions that lower my New York taxable income?
Yes. You can claim the standard deduction (which varies by filing status and age) or itemize deductions if they exceed the standard amount. Common deductions include mortgage interest, property taxes, charitable donations, and student loan interest. New York also allows deductions for contributions to certain retirement accounts like traditional IRAs and 401(k)s.
What happens if I do not pay my New York State income tax?
The New York Department of Taxation and Finance can assess penalties and interest on unpaid taxes, place a lien on your property, or garnish your wages. If you cannot pay the full amount, you can request a payment plan. Contact the department directly to discuss your options before the debt grows larger.
Does New York tax retirement income differently?
New York does not tax Social Security benefits or military pensions. However, it does tax distributions from traditional IRAs, 401(k)s, and other retirement accounts at the same rates as ordinary income. Distributions from Roth IRAs are not taxed if certain conditions are met. Pension income from private employers is generally taxed as ordinary income.