Navigating taxes in New York can be challenging given the complexity of tax rates, which vary for income, property, sales, and more. In this guide, we'll break down the tax rates applicable in New York and explain what residents, homeowners, and business owners can expect.

  1. Income Tax Rates in New York

New York's income tax rates are progressive, meaning they increase as income rises. The state has eight income tax brackets, which range from 4% to 10.9%. This tax applies to residents, part-time residents, and non-residents earning income within New York.

New York Income Tax Brackets (2023)

Income Level (Single Filers)

Tax Rate

Up to $8,500

4.0%

$8,501 to $11,700

4.5%

$11,701 to $13,900

5.25%

$13,901 to $21,400

5.85%

$21,401 to $80,650

6.25%

$80,651 to $215,400

6.85%

$215,401 to $1,077,550

9.65%

Over $1,077,550

10.9%

Note that married couples and head-of-household filers face slightly different brackets, but the same rates apply.

New York City Income Tax Rates

Residents of New York City face additional income taxes, ranging from 3.078% to 3.876%, depending on income level.

  1. Property Taxes in New York

Property taxes in New York are among the highest in the United States, varying by county. Property tax rates are calculated based on the assessed value of the property and are determined by local municipalities. Here's a general breakdown:

  • Average Property Tax Rate: Approximately 1.23% of assessed property value.
  • Median Property Tax: Around $5,407 per year, though it can vary substantially across counties.

For example, homeowners in Westchester County, the highest in the state, may pay over $17,000 annually, while some upstate regions have lower rates.

School District Taxes

A significant portion of New York property taxes goes to local school districts, which often represent over 60% of a homeowner's total property tax bill.

  1. Sales Tax Rates in New York

The state-level sales tax in New York is 4%, but localities can impose additional sales tax rates, making the total rate vary.

Total Sales Tax Rates in Key Cities

Location

State Tax Rate

Local Sales Tax

Total Sales Tax

New York City

4%

4.5%

8.5%

Buffalo

4%

4.75%

8.75%

Rochester

4%

4.0%

8.0%

Syracuse

4%

4.0%

8.0%

Exemptions and Considerations

Certain items, like most unprepared foods and prescription medications, are exempt from state sales tax. Additionally, clothing and footwear under $110 are tax-exempt in some areas.

  1. Capital Gains Tax Rates in New York

If you sell assets like stocks, real estate, or other investments, capital gains taxes may apply. These gains are subject to both federal and state taxes.

  • Short-term capital gains: Taxed as ordinary income and therefore subject to the same rates as income tax.
  • Long-term capital gains: Federal long-term capital gains rates range from 0% to 20%, but New York taxes these at the same rate as regular income.

Home Sale Exemption

If you sell your primary residence, you may be eligible for a federal tax exemption of up to $250,000 for single filers or $500,000 for married couples, provided you've lived in the home for at least two out of the last five years.

  1. Corporate Tax Rates in New York

New York has a corporate tax rate of 6.5% for businesses earning less than $5 million in federal taxable income, while companies above this threshold are taxed at 7.25%. New York City also imposes additional taxes on businesses operating within the city.

  1. Estate and Inheritance Taxes in New York

New York is one of the few states that impose an estate tax, though it does not levy an inheritance tax.

Estate Tax Rates

  • Exemption Threshold: Estates valued below $6.11 million (as of 2023) are exempt from estate taxes.
  • Tax Rate: For estates exceeding this threshold, tax rates range from 3.06% to 16%.
  1. Special Tax Considerations for Homeowners

For New Yorkers who own a home, there are specific tax benefits and considerations:

  • STAR Program: The School Tax Relief (STAR) program offers a property tax break to eligible homeowners, which can reduce school taxes significantly.
  • Mortgage Interest Deduction: Homeowners can also deduct mortgage interest from their taxable income, a benefit available on both federal and state returns.
  • Home Sale Capital Gains Exemption: Homeowners who meet the residency requirements may also avoid capital gains taxes on profits made from selling their primary residence.
  1. Final Tips for Managing Taxes in New York

Living and working in New York means navigating a complex tax system. Here are a few practical tips:

  1. Use Deductions Wisely: Review all potential state deductions, such as contributions to New York 529 College Savings Plans or mortgage interest.
  2. Plan for NYC and NYS Dual Taxes: For New York City residents, account for both state and city tax obligations when budgeting for the year.
  3. Seek Professional Guidance: Consider working with a tax advisor, especially if you're a high-income earner, business owner, or homeowner.

Ready to Sell Your Home? Visit CPA Clinics for Tax Guidance!

If you're planning to sell your home, understanding the tax implications is essential. CPA Clinics can help you maximize your financial outcomes by guiding you through New York's tax regulations for home sales, ensuring you receive every eligible benefit and exemption.

Consider visiting CPA Clinics for expert guidance on home sale tax planning.