Yonkers Income Tax (2024)

Quick Reference

Yonkers Resident Surcharge

Rate: 16.75% of New York State income tax

Calculation: 1. Calculate NY state income tax (before credits) 2. Multiply by 16.75% 3. Result = Yonkers resident income surcharge

Example: - NY state tax: $10,000 - Yonkers surcharge: $10,000 x 16.75% = $1,675 - Total: $11,675

Yonkers Nonresident Earnings Tax

Rate: 0.50% of Yonkers-source earned income

Applies to: - Nonresidents who work in Yonkers - Earned income only (wages, self-employment) - Not investment income, rental income, etc.

Calculation: - Gross earnings from Yonkers employment x 0.50%

Example: - Salary earned in Yonkers: $100,000 - Yonkers nonresident tax: $100,000 x 0.50% = $500

Details

Yonkers Resident Tax

Yonkers uses surcharge method (unlike NYC separate tax):

Why surcharge method: - Simpler administration - Automatically adjusts with state tax changes - No need for separate brackets

Advantages: - Progressive like state tax - Higher earners pay more - Credits and deductions at state level reduce Yonkers tax

Disadvantages: - Less transparent (not obvious rate paid) - Can increase tax burden significantly

Effective Yonkers Resident Rate

Effective rate varies by income:

State tax rate x 16.75% = effective Yonkers rate: - If state rate 4.00%, Yonkers effective rate: 0.67% - If state rate 6.85%, Yonkers effective rate: 1.15% - If state rate 10.90%, Yonkers effective rate: 1.83%

Example calculations:

Single filer, $100,000 income: - NY state tax: approximately $5,500 - Yonkers surcharge: $5,500 x 16.75% = $921 - Effective Yonkers rate: 0.92%

Single filer, $500,000 income: - NY state tax: approximately $32,000 - Yonkers surcharge: $32,000 x 16.75% = $5,360 - Effective Yonkers rate: 1.07%

Single filer, $10,000,000 income: - NY state tax: approximately $1,050,000 - Yonkers surcharge: $1,050,000 x 16.75% = $175,875 - Effective Yonkers rate: 1.76%

Who Must Pay Yonkers Tax

Resident surcharge:

Yonkers resident defined: - Domiciled in Yonkers, OR - Maintain permanent place of abode in Yonkers and spend more than 183 days there

Same definition as NY state residency: - Domicile = true, fixed, permanent home with intent to return - Statutory residency = permanent place of abode + 183 days

All income taxed: - Wages (even if earned outside Yonkers) - Investment income - Business income - Capital gains - All other income

Yonkers Nonresident Earnings Tax

Who pays: - Nonresidents working in Yonkers - Includes residents of NYC, other NY cities, NJ, CT, etc.

Earned income only: - Wages - Self-employment income from Yonkers business - NOT investment income - NOT rental income - NOT capital gains

Withholding: - Employers must withhold 0.50% for employees working in Yonkers - Reported on W-2

Filing requirement: - Report on Form IT-203 (nonresident return) - Line 60 shows Yonkers nonresident earnings tax

Cannot Pay Both Taxes

If Yonkers resident: - Pay 16.75% surcharge - Do NOT pay 0.50% earnings tax - Even if working in Yonkers

If nonresident working in Yonkers: - Pay 0.50% earnings tax - Do NOT pay 16.75% surcharge - Unless you become resident during year (part-year)

Part-Year Yonkers Residents

Allocate income between resident and nonresident periods:

Resident period: - Pay 16.75% surcharge on state tax allocated to resident period

Nonresident period (if working in Yonkers): - Pay 0.50% earnings tax on Yonkers wages during nonresident period

Reported on Form IT-203: - Part-year residents use nonresident return - Separate calculation for each period

Yonkers vs. NYC Tax

Different structures:

NYC tax: - Separate tax with own brackets (3.078% to 3.876%) - Applied to NYC taxable income

Yonkers tax: - Surcharge on state tax (16.75%) - No separate brackets

Comparison (Single, $200,000 income):

NYC resident: - NY state tax: $12,000 - NYC tax: $7,752 - Total: $19,752

Yonkers resident: - NY state tax: $12,000 - Yonkers surcharge: $2,010 - Total: $14,010

Yonkers tax generally lower than NYC tax for same income.

Credits and Deductions

Yonkers has no separate credits or deductions:

Impact of state credits: - State credits reduce state tax - Reduced state tax reduces Yonkers surcharge - Indirect benefit for Yonkers residents

Example: - State tax before credits: $10,000 - State tax after $1,000 credit: $9,000 - Yonkers surcharge: $9,000 x 16.75% = $1,508 (vs. $1,675) - Yonkers benefit: $167

Estimated Tax

Yonkers residents must include Yonkers tax in estimated payments:

Calculation: - Estimate total NY state tax - Multiply by 16.75% - Add to estimated payment

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

Nonresident earnings tax: - Usually covered by withholding - If self-employed in Yonkers, include in estimated payments

Common Mistakes

NYC resident working in Yonkers: - Mistakenly pays Yonkers nonresident tax - Should only pay NYC tax (not subject to Yonkers tax)

Yonkers resident paying both taxes: - Pays 16.75% surcharge AND 0.50% earnings tax - Should only pay surcharge

Part-year resident not allocating: - Pays full-year surcharge when only resident part of year - Must allocate using IT-203

Nonresident paying surcharge: - Lives outside Yonkers but pays 16.75% surcharge - Should only pay 0.50% earnings tax (if working in Yonkers)

Citations

New York Tax Law: - NY Tax Law § 603 - Imposition of city taxes on city residents - NY Tax Law § 1340 - Yonkers tax - NY Tax Law § 1304 - Yonkers nonresident earnings tax

Regulations: - 20 NYCRR Part 132 - Resident and Nonresident Individuals

Forms: - IT-201 - Resident Income Tax Return (includes Yonkers surcharge) - IT-203 - Nonresident and Part-Year Resident Return (includes Yonkers taxes) - IT-2105 - Estimated Tax Payment Voucher

NYS Department of Taxation and Finance: - Instructions for Form IT-201 - Instructions for Form IT-203 - Publication 58 - Yonkers Income Tax Information - https://www.tax.ny.gov/pit/

City of Yonkers: - https://www.yonkersny.gov/ (general city information)