New York State Tax Profile
What You Need to Know About New York State Taxes
New York State imposes all three major state taxes. It has an income tax, a sales tax and property taxes. It consistently tops lists for having the highest rates for these taxes in the nation, and it also imposes an estate tax.
New York Property Taxes
New York has no tax on personal property such as vehicles and jewelry, but there are property taxes on real estate. These taxes are actually paid to local governments such as counties, cities and school districts. The state does not take a cut of these revenues. All property tax revenues go directly to the localities for their schools, police and fire departments, road maintenance and other services.
Property tax rates are determined by localities, and they depend heavily on the needs of their yearly budgets. Counties in upstate New York have some of the highest property taxes in U.S. Under state law, most counties and municipalities must assess property taxes at a uniform percentage of value. The law does not say how much that percentage must be, and it can range anywhere from 5 percent up to 99 percent, although it cannot exceed 100 percent. The law merely requires that all properties are treated equally and are charged the same rate.
Property Tax Exemptions
State law allows localities to grant property tax exemptions to senior citizens, veterans or people with documented disabilities. The STAR exemption applies to owners of residential property who use their properties as their primary residences. STAR stands for the School Tax Relief program and it offers an exemption for a portion of a home’s value from school taxes. Seniors age 65 and older can qualify for an enhanced STAR exemption if their incomes to do not exceed the state standard.
New York Income Tax
New York state income tax rates range from 4 percent to 8.82 percent, depending on a taxpayer's income. The lowest rate applies to the first $8,400 of taxable income and it increases incrementally from there. As of 2016, the highest rate is applicable to incomes exceeding $1,062,651. Government pensions are exempt from income tax. New York City has its own tax rates.
Most federal itemized deductions are allowed on New York returns. Deductions are available for college tuition and contributions to the New York 529 plan. There are also several tax credits available for expenses like child and dependent care costs, The state has its own version of the earned income credit. It's 30 percent of the amount of your federal credit as of 2016.
New York Estate Tax
The estate tax is based on the overall value of a decedent’s estate, provided the decedent was a New York resident or owned real or tangible personal property within the state. Estates valued at $3,125,000 are exempt for deaths that occurred between April 1, 2015 and March 31, 2016. This exemption increases to $4,187,500 for deaths occurring between April 1, 2016 and March 31, 2017, and again to $5.25 million for deaths occurring between April 1, 2017 and December 31, 2018.
The state does not additionally tax specific inheritances.
Sales and Other Taxes
The state's sales tax has been set at 4 percent since June 1, 2005, but local municipalities can add up to 5 percent. Food, prescription drugs, and non-prescription drugs are exempt, as are clothing and footwear costing less than $110 per item.
The state imposes a combined motor fuel tax, petroleum testing fee, gasoline sales tax and gas excise tax at a whopping 60.72 cents a gallon. The cigarette tax is $4.35 per pack of 20.