Personal income taxesTaxable income
How is taxable personal income determined in your state?
New York State imposes tax on resident individuals on income from all sources. Non-resident individuals are taxed with respect to income derived from or connected with New York sources only. Part-year residents are subject to tax on:
- income received from all sources while a resident; and
- the portion of income derived from or connected with New York sources while a non-resident.
In determining the New York source income of non-residents and part-year residents, New York will treat days worked outside New York as New York work days if the services were performed outside New York for the convenience of the employee, rather than the convenience of the employer. Similar to New York State, New York City imposes tax on income from all sources for resident individuals and part-year residents are subject to tax for the portion of the year that they were a resident. New York City currently imposes no income tax on non-residents.
Personal income tax in New York State starts with the determination of the individual’s federal adjusted gross income. New York requires additions of certain items to federal adjusted gross income, including:
- state income taxes deducted in arriving at federal adjusted gross income; and
- interest income on obligations of any state or local government other than New York or its political subdivisions.
New York State allows subtractions of certain items from federal adjusted gross income, including certain pensions and social security benefits, and interest income on U.S. bonds. Further, unlike the federal income tax, New York State does not tax income from capital gains and ordinary income differently. New York City taxable income for an individual taxpayer who is a resident of New York City is the same as New York State taxable income.
Under the 2020–2021 budget legislation, New York State and City personal income taxes are decoupled from certain changes made to the Internal Revenue Code by the CARES Act, including the temporary suspension of the limitations in the Tax Cuts and Jobs Act on taxpayers’ ability to carry back net operating losses.
Beginning in 2021, New York residents can claim credit for entity-level taxes paid to other states that are “substantially similar” to the New York pass-through entity tax on account of income both derived from such other state and subject to tax under article 22. As states have enacted their own unique pass-through entity taxes, it is not clear how “substantially similar” may be interpreted. Any excess credit is refundable.Tax residence
Under what circumstances is an individual deemed resident in your state for personal income tax purposes?
An individual is generally considered to be a New York resident for tax purposes if he or she:
- is domiciled in New York; or
- maintains a permanent place of abode in New York and spends more than 183 days of the taxable year in New York.
For this purpose, any part of a day spent in New York counts as a full day (e.g., less than one hour counts the same as 24 hours).
The same general test applies for determining residency for New York City purposes (i.e., whether the individual is domiciled in New York City, or maintains a permanent place of abode and spends more than 183 days in New York City).
A taxpayer who is a domiciliary of New York will nonetheless be considered a non-resident in certain limited circumstances where he or she:
- either does not maintain a permanent place of abode or spends 450 days during any 548-day period out of the country; and
- is only in New York for a limited prescribed period of days during the tax year.
What are the applicable personal income tax rates?
In 2021, marginal rates for New York State personal income tax range from 4 per cent to 10.90 per cent.
In 2021, marginal rates for New York City personal income tax range from 3.078 per cent to 3.876 per cent.
Individuals who are residents of Yonkers, or have Yonkers source income, are subject to an extra tax surcharge.
New York State also imposes metropolitan commuter transportation mobility tax (M.C.T.M.T.) ranging from 0.11 per cent to 0.34 per cent on certain individuals who have net earnings from self-employment exceeding $50,000 allocated to the metropolitan commuter transportation district (M.C.T.D.). The M.C.T.D. includes:
- New York City (the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island)); and
- the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.
What exemptions, deductions, and credits are available?
For 2020, the New York standard deduction amounts, subject to inflation adjustments, are:
- $3,100 for single individuals who can be claimed as dependents;
- $16,050 for married individuals filing a joint return;
- $8,000 for single individuals or married individuals filing separately; and
- $11,200 for heads of household.
No personal exemption is available for the taxpayer or their spouse. A $1,000 exemption is allowed for each dependent.
Generally, a New York taxpayer is entitled to the same deductions as under federal law (except for New York state and local taxes). However, in 2018 New York State adopted legislation amending the itemized deduction provisions of the Tax Law to refer to federal deductions as they existed immediately prior to the enactment of the 2017 tax legislation known as the Tax Cuts and Jobs Act.
New York itemized deductions are also subject to limitation where a taxpayer’s adjusted gross income exceeds certain levels, depending on filing status. The phase out begins when adjusted gross income exceeds:
- $200,000 for married taxpayers filing jointly;
- $100,000 for single taxpayers; and
- $150,000 for heads of household.
For taxable years beginning after 2009 and before 2025, for an individual whose adjusted gross income is between $1 million and $10 million, no itemized deductions are allowed other than an amount equal to 50 per cent of the individual’s federal itemized deduction for charitable contributions. For a taxpayer whose New York adjusted gross income exceeds $10 million, no itemized deductions are allowed other than an amount equal to 25 per cent of the individual’s federal itemized deduction for charitable contributions.
New York State allows various credits, including for:
- child and dependent care;
- college tuition and earned income tax; and
- taxes paid to other states.
What filing requirements and procedures apply?
New York resident individuals must file a New York tax return if required to file a federal return, or if their federal adjusted gross income plus New York additions exceeds $4,000. Because New York City income tax filing obligations are based on those of New York State, the filing thresholds for New York City are the same as those of the state.
Non-residents with income from New York sources with New York adjusted gross income that exceeds their New York standard deduction must file a New York tax return.Employer obligations
What obligations are imposed on the employer in relation to the collection and remittance of state personal income taxes (eg, withholding)?
In New York, employers must withhold taxes from wages and certain non-wage items (e.g., unemployment compensation benefits, annuity payments, and lottery winnings). Failure to file a withholding tax return and pay a tax withheld is subject to a penalty of 5 per cent per month, which may increase to 25 per cent plus interest.
Employers engaged in business in the M.C.T.D. are also liable for M.C.T.M.T. (a state-imposed payroll tax) if:
- they are required to withhold New York State income tax from wages paid to employees; and
- their payroll expense for all covered employees exceeds $312,500 for that calendar quarter.
The M.C.T.M.T. rate ranges from 0.11 per cent to 0.34 per cent.