New York Tax Guide 2026

Income tax brackets (single — MFJ thresholds roughly double)

Estimated 2026 single brackets (inflation-indexed; verify against DTF): • 4% — to ~$8,500 • 4.5% — to ~$11,700 • 5.25% — to ~$13,900 • 5.5% — to ~$80,650 • 6% — to ~$215,400 • 6.85% — to ~$1,077,550 • 9.65% — to ~$5,000,000 • 10.3% — to ~$25,000,000 • 10.9% — over $25,000,000 No separate capital gains rate — all gains taxed at ordinary rates. No state exclusion for §1202 QSBS (NY conforms here, unlike CA — federal exclusion flows through).

NYC personal income tax

New York City residents pay an additional personal income tax on top of NY state tax. 2026 rates (single): • 3.078% — first ~$12,000 • 3.762% — to ~$25,000 • 3.819% — to ~$50,000 • 3.876% — over ~$50,000 Non-residents do NOT pay NYC tax even if working in NYC. Yonkers residents pay a state-tax surcharge (~16.75%); Yonkers non-resident commuters pay 0.5% of NY-source wages.

Convenience-of-employer doctrine — the remote-work trap

Under 20 NYCRR §132.18(a) (upheld in Zelinsky v. Tax Appeals Tribunal, 1 N.Y.3d 85 (2003), Huckaby v. NY Tax Appeals Tribunal (2005)), a non-resident's wages are sourced to NY for any day worked outside NY if the work is performed there for the employee's convenience rather than the employer's necessity. In practice: a Florida resident working remotely 5 days/week for a NYC employer pays NY tax on EVERY remote day, with limited home-state credit relief. Only days where the employee can prove the employer required out-of-state work (bona fide office, employer-required field visit) escape NY sourcing. The doctrine is the single most consequential tax issue for high-paid remote workers leaving NYC. Always discuss with a CPA before assuming relocation saves NY tax.

Statutory residency — the 183-day audit

Under N.Y. Tax Law §605(b)(1)(B), a person is a statutory resident if they: 1. Maintain a permanent place of abode in NY (any year-round-suitable dwelling owned, rented, or available — even a vacation home a parent owns), AND 2. Spend MORE than 183 days physically in NY during the year (any part of a day counts, including transit through NY airports for some interpretations — Gaied v. NY Tax Appeals Tribunal narrowed this in 2014). NY DTF audits this with: EZ-Pass logs, credit card transactions, cell-tower geolocation, doorman building logs, social media check-ins. Day-counting calendars (TaxBird, Monaeo) are practitioner-standard for executives splitting time between NY and FL/CT/NJ.

Pass-Through Entity Tax (PTET)

NY's PTET (N.Y. Tax Law §860–866) lets eligible S-corps and partnerships elect to pay state income tax at the entity level, fully deductible federally — bypassing the SALT cap for owners. Rates (graduated, 2026 est.): • 6.85% — first $2M of taxable income • 9.65% — $2M–$5M • 10.3% — $5M–$25M • 10.9% — over $25M NYC has its own NYC PTET (4-tier matching state) — partners/shareholders who are NYC residents get an NYC-level credit. Election is annual and irrevocable for the year; due by March 15 for the tax year.

Sales tax

State rate 4%. Local rates (counties and NYC): 3%–4.875%. NYC combined: 8.875% (4% state + 4.5% city + 0.375% MCTD). Most upstate counties: 7%–8%. Economic nexus: $500,000 + 100 transactions (NY uses AND — must cross both).

Property tax

Statewide effective average ~1.4%, but highly variable: Westchester, Rockland, Nassau, Suffolk counties average >2%; NYC ~0.88% (artificially low because of the city's complex Class 1 / 2 / 3 / 4 assessment caps); upstate generally 2%–3%. STAR exemption (School Tax Relief) for owner-occupants under $500k income provides school-tax credit. Senior STAR enhanced credit available.

Self-employed and licensing

NY does NOT use the ABC test — common-law classification governs. NYC Freelance Isn't Free Act requires written contracts for engagements >$800 and on-time payment, with private right of action for unpaid freelancers (NYC Admin Code §20-927). City-level business taxes for NYC: General Corporation Tax (8.85%) for C-corps; Unincorporated Business Tax (4%) on net income above ~$95k for sole proprietors and partnerships operating in NYC — a meaningful additional burden for self-employed New Yorkers.

Worked example: David Cohen, partner at a NYC law firm (Manhattan resident, single, 2026)

David's 2026 K-1 income: $1,250,000. Firm elects NYC and NY PTET. He has $80,000 of LTCG separately.

Federal: ~$415k tax + $46k NIIT-style + ~$28k FICA from guaranteed payment (skipped). NY state tax (resident, all income NY-source): Taxable income ~$1,250k Apply 2026 brackets: ~$104,500 NY state tax Plus on $80k LTCG (ordinary in NY): ~$7,700 Total NY state: ~$112,200 NYC tax (resident): 3.876% on the bulk over $50k: ~$50,000 PTET offset (assume firm elects both NY and NYC PTET): NY PTET paid at entity level on David's share: ~$104,500 (9.65% bracket) Federal deduction at entity level — saves ~$38,700 federal David's NY personal liability reduced by PTET credit ≈ wash on state Net state + local burden after PTET: $112,200 NY + $50,000 NYC = $162,200 gross; federal SALT-cap benefit from PTET ≈ $38,700 saved Convenience-of-employer note: irrelevant here — David lives and works in NYC.

Statute references

• Statutory residency — N.Y. Tax Law §605(b)(1)(B)
• Convenience-of-employer regulation — 20 NYCRR §132.18(a)
• Statutory residency dwelling test narrowed — Gaied v. NY Tax Appeals Tribunal, 22 N.Y.3d 592 (2014)
• Convenience doctrine upheld — Zelinsky v. Tax Appeals Tribunal, 1 N.Y.3d 85 (2003)
• Pass-Through Entity Tax — N.Y. Tax Law §§860–866
• NYC Unincorporated Business Tax — N.Y.C. Admin. Code §11-503
• Freelance Isn't Free Act — N.Y.C. Admin. Code §20-927 et seq.

Related pages

• Multi-State Tax Guide →
• PTET Analyzer →
• State Tax Comparison →
• PTET SALT Workaround Guide →