The state of New York imposes all three major taxes: income tax, sales tax, and property taxes. The state's tax rates consistently rank among the nation's highest, and it also imposes an estate tax.
New York State Income Tax
New York State income tax rates range from 4% to 10.90%% for the 2021 tax year, depending on a taxpayer's income.
The lowest rate of 4% applies to the first $8,500 of taxable income for single filers and the first $17,150 for taxpayers who are married filing jointly. The tax rate then increases incrementally based on income.
The highest rate of 10.90% is applicable to incomes exceeding $25 million for taxpayers who file as single, head of household, or married filing jointly.
Government pensions and pensions from certain government authorities, including Social Security, are exempt from income tax in New York.
The Standard Deductions
New York's standard deductions also depend on filing status. As of the 2019 tax year, they were:
- Single and you're someone else's dependent on a federal return: $3,100
- Single and you're not someone else's dependent on a federal return: $8,000
- Head of household: $11,200
- Married filing jointly: $16,050
- Married filing separately: $8,000
- Qualifying widow(er): $16,050
Itemized Deductions and Tax Credits
Most federal itemized deductions are allowed on New York returns. Deductions are available for college tuition and for contributions to the New York 529 plan.
Several tax credits are available for expenses such as child and dependent care costs. The state has its own version of the earned income credit.
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 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:
- Police and fire departments
- Road maintenance
- Other local services
Under state law, most counties and municipalities must assess property taxes at a uniform percentage of value. Without accounting for exemptions, properties of equal value in the same community should pay the same amount in property taxes. The owners of more valuable properties should pay more in taxes than the owner of less valuable properties.
Property Tax Exemptions
State law allows localities to grant property tax exemptions to senior citizens, veterans, or people with documented disabilities.
The School Tax Relief (STAR) exemption applies to owners of residential property who use their properties as their primary residences. STAR 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 do not exceed the state standard, which can change annually. The income limit was $88,050 for tax year 2020 and increased to $90,550 for 2021.
The Enhanced STAR program was updated in 2019 to require that all recipients enroll in the Income Verification Program. First-time recipients and new homeowners must now apply for the STAR Credit with the New York Tax Department.
New York Estate Tax
New York's estate tax is based on the overall value of a decedent’s estate, provided that the decedent was a New York resident or owned real or tangible personal property within the state.
Estates valued at $5,930,000 or less are exempt from the estate tax for deaths that occur on or after Jan. 1, 2021, through Jan. 1, 2022. This exclusion is indexed for inflation, so it changes annually.
The top tax rate for 2021 was 16% on estates with values of more than $10.1 million. Smaller estates pay rates ranging from 3.06% to 15.2%.
You must include the value of certain gifts made during your lifetime to the value of your estate, but there are exceptions for gifts made prior to April 1, 2014, or between Jan. 1 and Jan. 15, 2019, or when the giver was a nonresident. This tax provision was renewed in 2019 and it continues through at least Jan. 1, 2026.
Sales and Other Taxes
The state's sales tax has been set at 4% since June 1, 2005, but local municipalities can add up to 8.88%. Food, prescription drugs, and non-prescription drugs are exempt, as are clothing and footwear costing less than $110 per item.
The state imposes a motor fuel tax that includes a:
- Motor fuel excise tax
- Petroleum business tax
- Petroleum testing fee
The state gasoline tax was 32.98 cents a gallon as of February 2021; state and federal taxes together are 51.38 cents per gallon. The cigarette tax is $4.35 per pack of 20.
State of New York Tax Rate Summary
New York continues to have some of the highest tax rates in the country. Its standard deductions are less than those at the federal level. New York taxes include:
- Income tax rates: 4% to 10.90%
- Standard deductions: $3,100 to $16,050
- Estate tax rates: 3.06% to 16%
- Sales tax: 4% plus up to 8.8% added on by municipalities