A Guide to New York Personal Income Tax
What Every New Yorker Should Know About Paying Income Tax
New York personal income tax rules are very similar to federal tax rules for individuals, providing for standard deductions, several tax credits, and refunds. New York only deviates from federal guidelines in a few ways, such as by exempting pension income from taxation. The New York tax code also provides several tax credits that help homeowners and those with children.
New York Tax Rates
New York uses a bracketed system in which tax rates increase as income rises. New York’s tax rates range from a low of 4% for those with taxable incomes of $17,150 or less to 8.82% for those making $2,155,350 or more.
Some states tax all residents at the same rate, regardless of how much they earn.
New York Income Tax Deductions
New York offers standard deductions ranging from $3,100 for single individuals to $16,050 for married taxpayers who file jointly. There's also an exemption deduction of $1,000 for each dependent.
New York decoupled from the Internal Revenue Code in one respect in 2018 when it began allowing residents to itemize their deductions regardless of whether they did so on their federal tax return.
New York has these deductions available as well:
- Contributions to New York’s 529 Plan: You can deduct up to $5,000 or $10,000 if you're married and filing jointly, or the actual amount you contributed, whichever is less.
- College Tuition: You can either take a deduction or a tax credit for college tuition in New York. Only tuition paid for undergraduate enrollment or attendance at an institution of higher education is deductible. This includes expenses paid using a qualified state tuition program, such as New York’s 529 College Savings Program. You can't deduct room and board, books, or activities, even if their purchase is required by the school.
Pension Income Can Be Excluded
Government pension income from New York state, a local government, the federal government (including Social Security benefits), and certain railroad pensions are not taxable in New York. You might qualify to exclude up to $20,000 of your pension income from taxation if you have income from a private pension and you're over age 59½.
New York Tax Credits
Income tax credits reduce your New York State income tax liability directly—the amount of tax you owe. Refundable credits can be claimed even if you don't owe any income tax. Some of the most commonly used tax credits in New York are:
- Child and Dependent Care Credit: This is a credit for expenses for the care of a child or dependent while you work or go to school. It's worth up to $2,310 as of 2020, and it's refundable.
- College Tuition Credit: A credit is available for up to $400 per student for qualified tuition expenses. You can either take this credit or the college tuition deduction, but not both. A worksheet is available to help you decide which option will offer you the most tax savings. This credit is also refundable.
- Earned Income Credit: New York's earned income credit is equal to 30% of your federal earned income credit, and it's reduced by the amount of any household credit you qualify for and claim. This credit is refundable.
- Household Credit: You can qualify for the household credit if you have an AGI of $28,000 or less for single filers and $32,000 or less for married filing jointly as of 2020. The credit ranges from $20 to $75 plus an additional $5 to $15 for each exemption claimed on your return.
- Empire State Child Credit: This is a tax credit for taxpayers who have one or more qualifying children. The amount of the credit is the greater of 33% of the portion of the federal child tax credit attributable to your qualifying children, or $100 multiplied by the number of qualifying children. This credit is available to single taxpayers with an adjusted gross incomes (AGIs) of $75,000 or less, and married filing jointly taxpayers with AGIs of $110,000 or less. Married filing separately taxpayers are limited to $55,000.
- Noncustodial Parent Earned Income Credit: This credit is for full-time New York residents who have a child who doesn't live with them and for whom they pay child support for at least half the year. You must be current on your child support obligation to qualify. The amount of the credit is the greater of 20% of the federal earned income credit (EIC) that you could have claimed if the child had lived with you, or 2.5 times the federal EIC you could have claimed if you met the eligibility requirements with no children. This credit is refundable.
- Real Property Tax Credit: Taxpayers who meet certain income limits can claim a credit for real estate taxes paid on property valued at $85,000 or less. It's available to either homeowners or renters who paid property taxes and meet eligibility requirements. The maximum credit amount is $375.
Paying Local Taxes on Your Return
Your city income taxes are calculated and paid on your New York State income tax return if you live in New York City or Yonkers. Forgetting to include these taxes is one of the most common mistakes made on New York income tax returns.
Filing Your Return
New York income tax returns are due by April 15 annually.
Requests for an extension must also be submitted by April 15 if you need more time to prepare your return.
You can find forms on the New York Department of Taxation and Finance website and submit your return through the mail. Another alternative for a faster refund and a more accurate return is to e-file through the state’s website. Payments can be made electronically, and you can elect to receive your refund through direct deposit to get it even more quickly.
The information contained in this article is not tax or legal advice and it's not a substitute for such advice. State and federal laws change frequently, and the information in this article might not reflect the most recent changes. Please consult with an accountant or an attorney for current tax or legal advice.