Taxes in New York
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New York state taxes favor the middle-class, but New York City residents might incur higher fees. Below, we explain various New York state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.
For information regarding taxes in other states, see Retirement Taxes by State.
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New York Tax Rates
|State Sales Tax
|Avg State/Local Sales Tax
|$0.17 per gallon
|$0.17 per gallon
|$4.35 per pack
|Effective Tax Rate:
|Social Security Tax
|Federal Income Tax Deduction:
New York State Taxes Explained
New York Sales Tax
4.0%. Food, prescription and over-the-counter drugs are exempt. Cities and counties may add up to 4.875% in additional sales tax.
New York Income Taxes
Top rate of 10.90% (on taxable income over $25 million). For the tax year 2023, the state will lower the tax brackets for middle-income earners.
New York City and Yonkers impose their own income tax. Residents of New York City and those in Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester Counties also pay a commuter tax.
New York Property Taxes
The average effective property tax rate in New York is 1.72%, or $5,407 on a $313,700 median-value home.
Local governments and public school districts have the option of reducing property taxes for qualified senior citizens. Seniors must be aged 65 or older and meet income limitations and other requirements. Each municipality or school district may set the maximum income limit between $3,000 and $29,000 for a 50% assessed value break.
Localities can also allow a less than 50% exemption to seniors with annual income over $29,000. This sliding-scale option allows taxpayers with a yearly income as high as $37,399.99 to get a 5% exemption in places that use the maximum limit. For more information, see the New York State property tax page.
A taxpayer’s primary residence may be partially exempted from school taxes under New York’s School Tax Relief Program (STAR) program. Seniors can take advantage of this program for a partial exemption from school property taxes. All New Yorkers who own and live in a one- to three-family home, condominium, cooperative apartment, manufactured home or farm dwelling are eligible for a STAR exemption on their primary residence.
There are two STAR exemptions. Both are based on income equal to federal adjusted gross income minus the taxable amount of total distributions from annuities or IRAs. The property must be the primary residence, and married couples can only use STAR on one property.
- The Basic STAR exemption is available for owner-occupied, primary residences regardless of the owners’ ages or incomes. The combined household income must be under $500,000.
- The Enhanced STAR exemption is available for the primary residences of senior citizens age 65 and older. The yearly household income must not exceed the statewide standard. All owners must be 65 or older by the end of the calendar year in which the exemption begins or be the spouse or sibling of an owner who is 65 or older. The combined income of all owners and resident owners’ spouses must be $88,050 or less. This amount increases to $90,550 for 2021.
New York Retirement Taxes
Social Security retirement benefits are tax exempt in New York. Military, civil service and New York state or local government pensions are exempt. The state also exempts up to $20,000 from qualified private pensions and out-of-state government pensions for those 59½ and older.
New York Estate and Inheritance Taxes
There is no inheritance tax in New York. The estate state tax ranges from 3.06% to 16%. The state provides a $5,850,000 basic exclusion amount for deaths on or after January 1, 2020, and before January 1, 2021. The basic exclusion amount ranged from $2,062,500 to $5,740,000 in previous years. The estate of a New York resident must file an estate tax return if the deceased’s federal gross estate plus any includable gifts exceed the basic exclusion amount at the time of death.
Different rules are in place for those who died on or after February 1, 2000, and before April 1, 2014.