New York State Tax Guide: State Tax Rates and Information

New York State tax rate is one of the highest in the nation. Taxes vary widely among the fifty states, so whether you live in New York now, or are considering a move, you’ll want to educate yourself on the NY state tax laws.

Figuring out your taxes can be daunting and can easily confuse anyone, which is why so many people leave it to the pros and hire tax preparation services. This article will help to inform you of New York state tax rates, help clarify areas you may not understand, and, most importantly, direct you to where you can turn for help.

First, it’s important to know that New York imposes all three major state taxes: income tax, sales tax, and property taxes. Being aware of each of these will help you to make sense of your taxes.

New York State income tax

New York State income tax rates range from 4% to 8.82% currently, depending on your income and filing status. If you live in New York City, you’ll be required to pay even more tax, as the city imposes its own local income tax system on top of the one the state requires.

Those rates range from 3.078% to 3.876%. NYC tax help is a good resource to help sort out your taxes, and also goes over penalties for failing to file or pay your taxes. You’ll want to utilize a tax calculator to get an idea of what you’ll either owe or have refunded,  and understand which tax bracket you fall into so you know the rate at which you are being taxed.

  • You can use a NY tax calculator to figure out where you fall on this range and how much income tax you can expect to pay. Enter your gross income and filing status and it will calculate your take home pay and tax rate, including Federal Tax deductions. There is also an advanced state tax calculator that takes into account other information, such as tax credits, number of dependents, tax-deferred retirement plans, etc. to help determine your tax return.
  • New York tax brackets show income levels and their corresponding tax rates. Basically, the more your income, the higher your tax rate. A single person living in New York earning less than $8,500 would be taxed at 4%. A single person earning over 1 million dollars per year would be taxed at 8.82%. If you are married and filing jointly, the income allowance doubles, but is charged at the same tax rate as a person filing single (earning about half as much income). For instance, a couple can make up to $17,150 per year and still be taxed at 4% (the same rate as a single person earning less that $8,500). Most residents fall somewhere in the middle on the tax brackets, with few paying the highest rate of 8.82%. Tax brackets are subject to change every few years, so you’ll want to keep up to date on the latest increases.

New York State sales tax

NY State and City charge sales tax on retail sales and many services. The City sales tax rate is 4.5%, the NY State Sales and Use Tax is 4%, and the Metropolitan Commuter Transportation District surcharge is 0.375%; for a total tax rate of 8.875%. NY sales tax rates vary by county, so the total tax rate changes based on where you are.

Purchases under $110 are exempt from NYC and NY State Sales Tax. Sales tax is calculated per item, so even if your total purchase is over $110, you only pay tax on individual items that cost $110 or more. Other items that are exempt from sales tax include: food, certain beverages, health supplements, diapers, medicine, medical supplies for home use, veterinary services, laundry and dry cleaning services, eyeglasses and hearing aids, shoe repair, and magazine/newspapers.

Services such as beauty, barbering, nail services, massage, tanning, tattooing, and gyms are taxed at the City Sales Tax Rate of 4.5%. There is no NY State Sales Tax on these services. If you buy a product from these services, however, it will be charged at 8.875%, the combined city and state tax.

NYC also charges a 10.375% tax (and an additional 8% surtax) on parking, garaging, or storing your vehicle in Manhattan. Be sure to look into the Manhattan Resident Parking exemption if you are a resident of the city and your car is registered in Manhattan. It exempts you from the 8% surtax mentioned above. Those who don’t qualify for this exemption have to pay the steep rate of 18.375%!

New York State property tax

NYS online tax center is a great tool to make sense all things tax-related, including New York State property tax. Living in New York City, you may find that it’s almost always more costly than the rest of the state, as far as tax rates go. Property tax is the exception here though, at just 0.80% compared to the statewide average of 1.65%. In New York, only real property is taxed, meaning just the land and any permanent structures on that land. Personal property like vehicles and jewelry is not taxed. Property tax is a local tax that varies by city, and is used to pay for public schools, police and fire, road maintenance, and other municipal services. Property taxes are based on the value of the real estate in a tax district, and the amount of revenue the tax authority needs. You’ll want to look into exemption options for lowering your property tax bill. Some of the exemptions available are School Tax Relief (STAR) Exemption, the Senior Citizens Homeowners Exemption, the Veterans Exemption, and the Disabled Homeowners Exemption. They all serve to lower the assessed value on your property, which lowers the tax amount you pay.

Taxes are complicated. There is a lot to know, and it’s a big job keeping up with all of the latest tax laws.  Get help filing yours if you don’t understand or don’t know where to begin. You don’t want to incur penalties for not filing/paying. If you have defaulted on paying them in the past, it’s not too late. IRS back tax help is available and can help get you caught up and back on track.