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. The state also imposes an estate tax.
New York State Income Tax
New York State income tax rates range from 4% to 10.90%% for the 2022 tax year, depending on a taxpayer's income. These rates are the result of legislation passed and sent to the governor in April 2021. The 10.90% rate is an increase from 8.82%. These rates became effective in 2021. They'll remain in place through tax year 2027.
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 2021 tax year (the return you'll file in 2022) 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 State 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 schools, police and fire departments, road maintenance, and other local services.
Most counties and municipalities must assess property taxes at a uniform percentage of value according to state law. Properties of equal value in the same community should pay the same amount in property taxes without accounting for exemptions. The owners of more valuable properties will 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 $90,550 for tax year 2021. It increases to $92,000 for 2022.
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 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 January 1, 2021, through January 1, 2022. This exclusion is indexed for inflation. It increases to $6,110,000 for deaths that occur in 2022.
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 in the value of your estate, but there are exceptions for gifts made prior to April 1, 2014, or between January 1 and January 15, 2019, or when the giver was a nonresident. This tax provision was renewed in 2019. It continues through at least January 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 motor fuel taxes including:
- Motor fuel excise tax
- Petroleum business tax
- Petroleum testing fee
The state gasoline tax was 32.98 cents per 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.
- New York continues to have some of the highest tax rates in the country.
- The state's standard deductions are less than those at the federal level.
- Income tax rates range from 4% to 10.90% as of 2022, increasing with the more you earn.
- Standard deductions range from $3,100 to $16,050 in 2021, the tax year for which you'll file in 2022.
- New York's sales tax is 4%, plus up to 8.8% that can be added by municipalities