Ultimate Guide New York State Tax 2023 – 2024

by ECL Writer
New York State Tax Frequently Asked Question

New York State is renowned for its bustling cities, thriving business community, and unique cultural offerings. However, with all of the opportunities that the state offers, come certain responsibilities, one of which is paying state taxes. As with any state, New York has its own set of tax laws and regulations that must be followed by individuals and businesses alike. Understanding these laws can be a daunting task for those unfamiliar with the tax code. This Eastcoastlaws.com article will provide an overview of the New York State tax system, including what types of taxes residents and businesses are required to pay, how the state determines a tax liability, and some common deductions and credits that may be available to taxpayers. Whether you’re a lifelong resident or a newcomer to the state, having a basic understanding of the New York State tax system can help you make informed financial decisions and avoid potential legal troubles.

What You Need To Know

  • Income tax: 4 percent to 10.9 percent
    New York has nine tax brackets, ranging from 4 percent to 10.9 percent. Residents of New York City and Yonkers also pay local income tax on top of state tax. 
  • Property tax: 1.4 percent of a home’s assessed value (average)
    Real estate taxes vary widely by county and municipality across New York, with an average tax rate of 1.4 percent of a home’s assessed value in 2021, according to the Tax Foundation. 
  • Sales tax: 8.52 percent (average combined state and local)
    A sales tax rate of 4 percent is levied on the sale of goods and services, in addition to local tax rates as high at 4.875 across the state. The state’s average combined sales tax rate is 8.52 percent, according to the Tax Foundation

How Is Income Taxed In New York?

Below are the nine tax brackets for the state. In addition to state income tax, Yonkers and New York City each impose local income taxes. Keep in mind that not all of your income is taxed equally. For instance, the first $8,500 of your $80,000 in earnings as a single filer would be subject to a 4 percent tax. Taxes on the subsequent $8,501 to $11,700 range from $340 + 4.5 percent, and so forth.

Single filers:

IncomeTax Rate
$0 to $8,5004%
$8,501 to $11,700$340, and 4.5% of income over $8,500
$11,701 to $13,900$484, and 5.25% of income over $11,700
$13,901 to $80,650$600, and 5.85% of income over $13,900
$80,651 to $215,400$4,504, and 6.25% of income over $80,650
$215,401 to $1,077,550$12,926, and 6.85% of income over $215,400
$1,077,551 to $5,000,000$71,984, and 9.65% of income over $1,077,550
$5,000,001 to $25,000,000$450,500, and 10.3% of income over $5,000,000
Over $25,000,000$2,510,500, and 10.9% of income over $25,000,000

Source: New York State Department of Taxation and Finance

Joint filers:

IncomeTax Rate
$0 to $17,1504%
$17,151 to $23,600$686, and 4.5% of income over $17,150
$23,601 to $27,900$976, and 5.25% of income over $23,600
$27,901 to $161,550$1,202, and 5.85% of income over $27,900
$161,551 to $323,200$9,021, and 6.25% of income over $161,550
$323,201 to $2,155,350$19,124, and 6.85% of income over $323,200
$2,155,351 to $5,000,000$144,626, and 9.65% of income over $2,155,350
$5,000,001 to $25,000,000$419,135, and 10.3% of income over $5,000,000
Over $25,000,000$2,479,135, and 10.9% of income over $25,000,000

Source: New York State Department of Taxation and Finance

All residents who have an adjusted gross income over $107,650, whether they are single or joint filers, also pay a supplemental tax. Your income and tax filing status (married filing jointly, single, married filing separately, or head of household) is used to determine how much you owe. For more details on how that tax is determined, consult the New York Form IT-201 (for residents) and Form IT-203 (for nonresidents/part-year residents).

Related Topic: SALES TAX NEW YORK – ALL YOU NEED TO KNOW

Are Pensions Or Retirement Income Taxed In New York?

The funds withdrawn from IRAs, 401(k)s, 403(b)s, and pensions are all aggregated and subject to normal income tax. The tax rate ranges from 4 to 10.9 percent, the same as other types of income.

However, tax exemptions apply to federal, state, and military retirement compensation.

The first $20,000 of retirement income (from a company pension, an IRA, a 401(k) account, or another retirement plan) is tax-free for people who are 5912 years old or older. Married couples receive a double exemption of $40,000 (each spouse is qualified for the $20,000 exclusion).

You can check your savings levels to see if you have enough to retire when and how you want by using the retirement calculator from AARP.

What About Investment Income?

After an initial exemption, capital gains from investments are subject to the same tax rates as ordinary personal income. This includes the proceeds from the sale of real estate.

Does New York Tax Social Security Benefits?

No, however depending on your income, you might have to pay federal taxes on a portion of your Social Security benefits. If you file an individual tax return and have an annual income between $25,000 and $34,000, or if you file jointly with a spouse and have an annual income between $32,000 and $44,000, up to 50% of your benefits may be taxed. The federal government will also tax up to 85% of your benefits if your combined income exceeds $34,000 for an individual or $44,000 for a pair.

The Social Security calculator from AARP will help you decide whether to file for benefits and how to get the most out of them.

How Is Property Taxed In New York? 

In New York, the valuation of your home, as determined by the state, is used to determine the local tax known as property tax. The Tax Foundation estimates that the average rate is 1.4 percent of your home’s assessed value.

Keep in mind that property taxes in the state differ significantly by county and municipality.

On the website of the New York Department of Taxation and Finance, you may find out how your home is valued and even fight it. On the website of the New York City Department of Finance, residents of New York City can find out how their property is valued and how much their property taxes will be. Vehicles, boats, and jewels are examples of personal property that is not taxed by the state.

Related Post: NEW YORK ESTATE TAX 

What About Sales Tax And Other Taxes?

  • Sales tax: There’s a 4 percent tax on many, but not all, consumer goods and services. Localities can add as much as 4.875 percent, and the average combined rate is 8.52 percent, according to the Tax Foundation. Find your local tax rate at the state taxation department’s website.

    The state doesn’t tax most groceries, clothing valued under $110, prescription or nonprescription drugs, medical equipment, and certain medical care services. A list of taxed and tax-exempt goods and services is on the state taxation department’s website.
  • Gas and diesel: There is an 8.05 cent-per-gallon tax on motor fuel in addition to state sales tax.
  • Alcohol: Beer is taxed at 14 cents per gallon, wine at 30 cents per gallon, and liquor at $2.54 to $6.44 per gallon, depending on the percentage of alcohol. New York City charges an additional 12 cents per gallon of beer and an additional $1 per gallon of alcohol. State excise taxes on alcohol are paid by the vendor, but some or all may be included in the retail price.
  • Commuter tax: A 0.375 percent tax is levied on certain employers and self-employed people conducting business in the New York City metro area, which includes these boroughs and counties: the Bronx, Brooklyn, Manhattan, Queens, Staten Island, Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester.
  • Lottery: Lottery winnings are subject to local, state, and federal taxes, but the amount varies depending on where you live and if you’ve moved to another state. More information is available in Publication 140-W.

Will I Or My Heirs Have To Pay Inheritance And Estate Tax In New York?

While there is no inheritance tax in New York, after the current exemption of $6,110,000, estates are subject to taxes at rates ranging from 5 to 16 percent. Rarely, estates may be subject to extremely high taxes, or the “tax cliff,” which could result in an estate paying tax of more than 100%.

By leaving assets worth more to charity than the state’s exemption limit, taxpayers can avoid the cliff.

Are There Any Tax Breaks For Older New York Residents?

In addition to the $20,000 state income tax exemption for people age 5912 or over — $40,000 for married couples — qualified seniors can reduce their property taxes by as much as 50% by lowering the assessed value of their home. You must be 65 years of age or older, as well as meet a number of other criteria (for more information, visit the website of the New York State Department of Taxation).

Additionally, there is a maximum income cap of $3,000 to $50,000 set by each county, city, town, village, or school district for that 50% exemption. You can find out more by visiting the state taxes department’s website or by calling 518-457-5181. Their website has a list of department phone numbers.

Municipalities may also employ a sliding scale to provide seniors with incomes above the municipal cap with a portion of their taxes. If you reside in a region that employs the sliding scale, the income and tax exemption rate scale is as follows:

  • $55,700 for a 20 percent exemption
  • $57,500 for a 10 percent exemption
  • $58,400 for a 5 percent exemption

Are Military Benefits Taxed In New York?

Pensions from the military are not taxed in New York. If you live in the state, active-duty salary is taxed in the same way as regular income. If you were assigned to duty in New York while serving in the military but weren’t a full-time resident of the state at the time, you are regarded as a non-resident. So, in New York, your military pay is tax-free.

Under the federal Servicemembers Civil Relief Act, military spouses may be eligible for a number of tax benefits, including an income tax exemption and the choice to claim the same state of residence as the service member.

What Is The Deadline For Filing New York State Taxes In 2023?

April 18 is the due date for federal tax returns as well as the state tax return for New York. Use the AARP tax calculator for assistance with determining your annual income taxes.

If you owe income taxes in New York but need an extension, you must file by the deadline of April 18 at the latest. The state taxation department’s website has information on how to obtain a six-month extension (until October 16).

New York filers will still be charged late fees for unpaid taxes even with an extension. Only late filing fines are removed by submitting a request for an extension by the deadline, which is April 18. You will be liable for both penalties in addition to your initial tax payment if you don’t file your tax return payment by October 16th.

Leave a Comment

This blog is ONLY for informational or educational purposes and DOES NOT substitute professional legal advise. We take no responsibility or credit for what you do with this info.