If you live in (or are considering moving to) the Empire State, consider how New York state tax could impact your overall financial burden. New York is known for its high cost of living, and the tax burden plays a significant role in what it costs to live there.
New York's income tax rates, property taxes, and sales tax make it one of the highest-taxed states in the U.S., but it's not without some perks.
In the News: A decades-old NYC property tax lawsuit could mean lower property taxes for NYC residents. TENNY’s complaint against New York’s property tax system argues that the current tax code violates the federal Fair Housing Act (FHA). The organization alleges it’s an unfair system with an “inequitable and discriminatory disparate impact” on certain protected classes of New York City property owners.
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If the TENNY lawsuit is successful, New York City’s property tax system could be rewritten. That alone could have broad impacts on similar claims which have failed, and help other plaintiffs who are still navigating legal challenges and seeking tax justice.
To learn more see Kiplinger's report NYC Property Tax Lawsuit Moves Forward Amid Eric Adams Turmoil.
[Data for this state tax guide was gathered from several sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
New York income tax
New York has a graduated state individual income tax rate ranging from 4% to 10.9%.
New York tax on retirement benefits: New York does not tax Social Security benefits.
Additionally, retirement income from the federal government, New York state and local government, and military retirement plans is tax exempt.
Railroad retirement benefits are also tax-exempt.
Note: Taxpayers age 59 1/2 and older can exclude up to $20,000 of federally-taxed income from private retirement plans or government plans from another state.
New York sales tax
The state sales tax rate is 4%, but New Yorkers pay a higher rate since localities can add as much as 4.53%.
In the New York City metro area, there is an additional 0.375% sales tax to support transit.
- Groceries: Exempt
- Clothing: Taxable
- Prescription drugs: Exempt
How much are property taxes in New York?
In New York, the median property tax rate is 1.54%, and the average property tax bill is $3,359, making it one of the most expensive in the U.S.
Thankfully for adults over age 65, property taxes could cost less.
New York Property Tax Breaks for Retirees
Property tax exemption for adults over age 65: New York law gives local governments and public school districts the option of granting a reduction on the amount of property taxes paid by qualifying adults over age 65 by reducing the assessed value of residential property by 50%. Older adults (aka seniors) over age 65 must meet certain criteria to qualify.
- Must be 65 or older
- Have a maximum income between $3,000 and $50,000 (varies by county, city, town, and school district)
- If income is over $50,000, some property owners may qualify for a partial exemption of between 5% and 20%.
Enhanced STAR program for adults over age 65: The Enhanced STAR program exempts part of a home's value from school property taxes. Adults over age 65 must meet the criteria to qualify for the tax break, and the property must be their primary residence.
- Adults must be 65 or older (or turn 65 in the calendar year they apply).
- Cannot have an income above $93,200 (includes income of resident spouses and domestic partners)
New York gas tax
Gasoline: $0.08 per gallon
Diesel: $0.08 per gallon
Source: Sales Tax Handbook
New York alcohol and tobacco taxes
| Product | Tax Amount |
|---|---|
| Cigarettes | $4.35 per pack |
| Other Tobacco Products | 75% of wholesale price |
Source: Sales Tax Handbook
| Product | Tax Amount |
|---|---|
| Wine | $0.30 per gallon |
| Beer | $0.14 per gallon |
| Liquor | $6.44 per gallon |
Source: Sales Tax Handbook
New York estate and inheritance taxes
There is no inheritance tax in New York, but there is an estate tax. For 2024, estates exceeding $6.94 million are subject to New York's estate tax.
Taxable gifts made by the decedent as a New York resident within three years before death are included as part of the estate. Tax rates range from 3.06% to 16%.
The New York estate tax is a "tax cliff." That means if the value of the estate is more than 105% of the current exemption, the exemption won't be available, and the entire estate will be subject to state estate tax.
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