New York State Tax Guide: State Tax Rates and Information

New York State Tax Guide: State Tax Rates and Information
New York’s state tax rate is one of the highest in the nation. Whether you live in New York now, or are considering a move, you’ll want to educate yourself on the NY state tax laws to ensure you’re in the clear come tax season.    Figuring out your taxes can be daunting and confusing to most, which is why so many people opt to get the help of professionals and hire tax preparation services. 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. Let’s review New York state tax rates, clarify areas you may not understand, and, most importantly, direct you to where you can turn for help.

New York State Income Tax 

New York state income tax rates range from 4% to 8.82%, 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 state’s.

New York State Tax Brackets 

In order to estimate your NY state taxes, you’ll first need to understand your tax bracket. A tax bracket uses your income amount to assign you a tax rate. Basically, the more your income, the higher your tax rate. For example: 
  • 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, your income allowance doubles, but you will be 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 New York 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 information for your tax year.

Estimating New York State Income Tax

If you’re looking for NYC tax help to estimate your income tax for the upcoming year, you’ll want to utilize an NY tax calculator to get an idea of what you’ll either owe or have refunded. You can also use this resource to understand which tax bracket you fall into, so that you know the rate at which you are being taxed.   To use, enter your gross income and filing status. The calculator will calculate your take home pay and tax rate, including federal tax deductions. If you’re interested in the most accurate estimation available, the advanced state tax calculator takes into account other information, such as tax credits, number of dependents, tax-deferred retirement plans, etc. to help determine a more exact tax return.

New York State Sales Tax

New York state and city charge sales tax on retail sales and many services. When calculating sales tax rate, you’ll need to add both the state tax rate of 4%, as well as the county tax rate. For instance, a person in New York City should expect to pay:  
  • New York state sales tax of 4% 
  • New York city sales tax of 4.5% 
  • Metropolitan Commuter Transportation District surcharge of 0.375% 
So, for a New York City resident, the total tax rate is 8.875%. Each county in New York has its own tax rates, so consult your county for the most accurate information. 

When are You Charged Sales Tax in NYC?

One unique feature of sales tax in NYC is that an item must cost $110 or more in order to be charged sales tax. 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, that item 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

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.    While New York boasts one of the highest costs of living in the country, property tax in New York is a surprising exception to this standard. Property tax in New York clocks in at just 0.80%, compared to the statewide average of 1.65%.    If you’re a property owner in New York, there are a number of ways to lower 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.   NYS Online Tax Center is a great tool to make sense all things tax-related, including New York State property tax. 

New York State Tax Filing Deadline 

As with all other U.S. states, the filing deadline for New York state taxes is the federal tax deadline, April 15th. In the event that this deadline falls on a weekend or a holiday, the deadline will be shifted by a day or two. 

Covid-19 Impact on New York State Tax Filing Deadline 

The 2020 Covid-19 pandemic had dramatic effects on New York residents. In the face of this global emergency, New York state pushed out the income tax filing deadline to July 15th, 2020

How to E-File My New York State Income Tax

In our digital age, many New York residents prefer to file their state income taxes online, rather than by mail. Not only is e-filing instantaneous, but many e-filing softwares offer guided filing, so that you don’t have to manage the process alone.    There are both free and paid options available for e-filing your New York state income taxes; it’s simply a matter of finding which solution works best for you. 

New York State Automatic Tax Filing Extension

If you require additional time to pay your New York state income tax, you can request an automatic tax filing extension on or before the tax deadline of April 15th. In order to do so, you must submit: 
  • For individuals: Form IT-370: Application for Automatic Six-Month Extension of Time to File for Individuals 
  • For partners and fiduciaries: Form IT-370-PF: Application for Automatic Six-Month Extension of Time to File for Individuals 

Filing an Amended New York State Tax Return 

If you’ve made an error on your New York state taxes, it’s imperative that you file an amended NY state tax return to avoid penalties or interest charges.    In order to do so: 
  • Complete your amended return as if you are filing for the first time
  • Submit any relevant forms to the amended information
  • Submit your amended return via mail or through the e-filing software of your choice 
  If you’re filing New York state taxes, it’s important to know that you don’t have to go at it alone. If you’ve made a mistake on your prior state taxes and have fallen into tax hardship, Community Tax is here for you with tax relief. Our tax resolution services help find the best solution for your needs, whether that is local tax debt relief or a program available through the IRS fresh start initiative. Contact us today.