A Guide to Several Taxes Imposed by New York City

An Overview of the Major Taxes Affecting NYC

Paying NYC Taxes: What to Expect: Property tax Income tax Sales taxes (food, prescription drugs, non-prescription drugs are exempt, among other select items) Taxicab ride tax Hotel occupancy tax

Bailey Mariner © The Balance 2020

New York City residents often find themselves paying the same tax twice, once to the city and again to the state. This is one of just a few cities in the country that has its own income tax. The city also has one of the highest cigarette taxes in the nation, and residents have to pay a state tax for a tobacco fix as well.

The high taxes don't stop there. Overall, New York State stands out for having some of the highest property taxes in the nation. 

New York City Property Tax

The New York City Department of Finance values residential and commercial properties. A tentative value value assessment is sent out to property owners on May 1 each year for most communities. A final assessment is then sent out if there aren't any changes. 

New York City assessments are based on percentages of market value, and those percentages can vary based on the type of property. You have a right to appeal if you don't agree with your assessment.

Property tax rates are set each year by the mayor and by city council, and they can vary depending on the type of property. They're applied to property values to help determine each homeowner's annual tax liability. Property taxes are due either in two semi-annual payments for homes with assessed values of more than $250,000, or four quarterly payments for homes with assessed values of $250,000 or less.  

New York City offers several exemptions and property tax reductions, including exemptions for senior citizens, veterans, and the disabled. The New York State STAR exemption for owner-occupied housing is also available, as well as property tax abatements or reductions for certain individuals.

The 2021-2022 New York State budget also gives homeowners a break in the form of a tax credit for any portion of real property taxes that exceeds 6% of their qualified adjusted gross incomes (QAGIs) if their QAGI is less than $250,000.

New York City Income Tax

New York City has a separate city income tax that residents must pay in addition to the state income tax. The city income tax rates vary from year to year. The tax rate you'll pay depends on your income level and filing status, and it's based on your New York State taxable income. There are no city-specific deductions, but some tax credits specifically offset the New York City income tax. 

If you work for the city but don't live there, you must still pay an amount equal to the tax you would have owed if you had lived there. This rule applies to anyone who began employment after Jan. 4, 1973.

Other New York City Taxes

New York City charges a sales tax in addition to the state sales tax and the Metropolitan Commuter Transportation District (MCTD) surcharge. But food, prescription drugs, and non-prescription drugs are exempt, as well as inexpensive clothing and footwear. 

There's also a state and local tax on hotel rooms for inexpensive to moderately-priced rooms. This tax rate includes New York City and New York State sales taxes, as well as a hotel occupancy tax. Rooms renting for less expensive prices are subject to the same tax rates, but at lesser nightly dollar amount fees.

Medallion owners or their agents pay a tax for any cab ride that ends in New York City or starts in the city and ends in Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, or Westchester counties. This tax, known as the taxicab ride tax, is generally passed on to consumers. Medallion owners are those who are duly licensed with a medallion by the Taxi Limousine Commission of New York City.  

Key Takeaways

  • New York City is one of the few cities in America that imposes its own income tax in addition to the state income tax.
  • Property tax rates are set annually by the mayor and city council, and property assessments can be appealed.
  • The city has its own city income tax that residents must pay in addition to the state income tax.
  • New York City charges its own sales tax as well, but certain purchases are exempt, including food, prescription and non-prescription drugs.
  • Taxicab rides are taxed in the city as well. Technically, it's paid by owners, but the expense is generally passed down to riders.