New York City Income Tax (2024)

Quick Reference

NYC Resident Tax Rates

Single and Married Filing Separately: - 3.078% on income up to $12,000 - 3.762% on income $12,001 to $25,000 - 3.819% on income $25,001 to $50,000 - 3.876% on income over $50,000

Married Filing Jointly and Qualifying Surviving Spouse: - 3.078% on income up to $21,600 - 3.762% on income $21,601 to $45,000 - 3.819% on income $45,001 to $90,000 - 3.876% on income over $90,000

Head of Household: - 3.078% on income up to $14,400 - 3.762% on income $14,401 to $30,000 - 3.819% on income $30,001 to $60,000 - 3.876% on income over $60,000

NYC Nonresident Tax

No NYC tax for nonresidents - Even if working in NYC, only NYC residents pay NYC income tax.

Exception: Yonkers nonresident earnings tax (0.50%) applies to nonresidents working in Yonkers (separate from NYC).

Tax Base

NYC tax computed on New York taxable income: - Same taxable income used for NY state tax - No separate NYC adjustments or deductions - NYC tax is IN ADDITION to NY state tax

Details

Who Must Pay NYC Tax

NYC residents pay NYC tax on all income:

Resident defined: - Domiciled in NYC, OR - Maintain permanent place of abode in NYC and spend more than 183 days in NYC

All income subject to NYC tax: - Wages from any location - Investment income - Business income - Rental income - Capital gains - All other income

Even if working outside NYC: - NYC resident working in New Jersey still pays NYC tax - Credit available for taxes paid to other states (on state return, not NYC)

NYC Tax Computation

Simple computation:

1. Calculate New York taxable income (from IT-201)
2. Apply NYC tax rates above
3. Result = NYC tax before credits
4. Subtract NYC credits (if any)
5. Result = NYC tax liability

Reported on Form IT-201: - Combined with NY state tax on same return - Line 40 shows NYC tax - Total tax = NY state tax + NYC tax

NYC vs. NY State Tax

Comparison for high earners:

Example: Single filer, $500,000 income: - NY state tax: approximately $32,000 (effective rate 6.4%) - NYC tax: approximately $19,000 (effective rate 3.8%) - Total NY + NYC: approximately $51,000 (effective rate 10.2%)

Top combined marginal rate: - NY state: 10.90% - NYC: 3.876% - Combined: 14.776% (highest city+state rate in nation)

Plus federal: - Federal: 37% + 3.8% NIIT = 40.8% - Total marginal rate: over 55% for highest earners

NYC Credits

NYC school tax credit: - For NYC residents only - Reduces NYC tax liability - Amount varies by income and filing status

Income limits (2024): - Single: phases out above $250,000 - MFJ: phases out above $500,000

Maximum credit: - Single: $125 - MFJ: $250 - HOH: $210

Child care credit: - NYC has separate child care credit - Based on federal credit with NYC modifications

Earned income credit: - NYC supplements NY state EITC - 5% of federal EITC - Refundable

Part-Year NYC Residents

Allocate income between NYC resident and nonresident periods:

Allocation methods:

Wages: - Allocate based on days worked during NYC residency period - Not based on when paid

Investment income: - Generally allocate based on time periods

Business income: - Various allocation methods depending on business type

Reported on Form IT-203: - Part-year residents use nonresident return - Separate columns for NYC resident period income

NYC Resident vs. Yonkers Resident

Cannot be both: - If resident of Yonkers, not resident of NYC (and vice versa) - Yonkers residents pay Yonkers tax, not NYC tax - Different tax structure (Yonkers is surcharge on state tax, NYC is separate tax)

Working in NYC, living in Yonkers: - No NYC tax (not NYC resident) - Pay Yonkers tax (Yonkers resident) - Some taxpayers mistakenly pay both

Estimated Tax

NYC residents must include NYC tax in estimated payments:

Quarterly payments: - Due same dates as federal (April 15, June 15, September 15, January 15) - Use Form IT-2105 to calculate

Safe harbor: - 90% of current year total tax (NY + NYC), OR - 100% of prior year total tax (110% if AGI over $150,000)

Underpayment penalty: - Applies to combined NY state and NYC tax - Interest and penalties can be significant

Common Mistakes

Nonresidents paying NYC tax: - Work in NYC but live in NJ/CT/Westchester - Should not pay NYC tax - Only NYC residents pay

Part-year residents not allocating: - Moved to/from NYC during year - Must allocate income to NYC resident period only - Cannot use IT-201 (resident return)

Claiming NYC school tax credit when not eligible: - Income too high - Not NYC resident for full year

Not paying NYC estimated tax: - Causes underpayment penalty - Includes NYC tax in safe harbor calculation

Citations

New York Tax Law: - NY Tax Law § 607 - Imposition of city tax on city residents - NY Tax Law § 1301 et seq. - NYC Personal Income Tax

NYC Administrative Code: - NYC Admin. Code Title 11, Chapter 17 - NYC Personal Income Tax - NYC Admin. Code § 11-1701 - Imposition of tax - NYC Admin. Code § 11-1704.1 - Rates of tax

Forms: - IT-201 - Resident Income Tax Return (includes NYC tax) - IT-203 - Nonresident and Part-Year Resident Return - IT-112-C - New York State Personal Income Tax Credits - IT-2105 - Estimated Tax Payment Voucher for Individuals

NYC Department of Finance: - NYC.gov - Personal Income Tax - https://www.nyc.gov/site/finance/taxes/business-nys-personal-income-tax.page

NYS Department of Taxation and Finance: - Instructions for Form IT-201 - Publication 361 - New York State Income Tax Information - https://www.tax.ny.gov/pit/