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New York Taxes: What You Need to Know

Federal, State, and Local Tax Withholding in New York in 2024

New York residents are subject to multiple levels of tax withholding, including federal, state, and local taxes. Below, each component is explained in detail to help New Yorkers understand how their income is taxed and the implications on their take-home pay.

Federal Tax Withholding

Federal Tax Withholding refers to the amount of federal income tax deducted from an individual’s paycheck. The United States federal tax system operates on a progressive structure in 2024, which means tax rates increase as taxable income rises. The federal income tax brackets for 2024 are as follows:

• 10% for income up to $11,000 for single filers.
• 12% for income from $11,001 to $44,725.
• 22% for income from $44,726 to $95,375.
• 24% for income from $95,376 to $182,100.
• 32% for income from $182,101 to $231,250.
• 35% for income from $231,251 to $578,125.
• 37% for income above $578,125.

This system is marginal, which means income is taxed at different rates as it moves through each bracket. As individuals earn more, their additional income is taxed at a progressively higher rate. Federal withholding aims to collect this income tax incrementally throughout the year to help taxpayers avoid a large bill when they file their tax return.

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New York State Tax Withholding

Here are the New York State Tax Brackets for 2024, focusing solely on the tax rates based on taxable income levels for both single filers and married couples filing jointly:

New York State Tax Brackets 2024

Single Filer Rates

• 4.00%: Taxable income greater than $0
• 4.50%: Income between $8,501 and $11,700
• 5.25%: Income between $11,701 and $13,900
• 5.50%: Income between $13,901 and $21,400
• 6.00%: Income between $21,401 and $80,650
• 6.85%: Income between $80,651 and $215,400
• 9.65%: Income between $215,401 and $1,077,550
• 10.30%: Income between $1,077,551 and $5,000,000
• 10.90%: Income greater than $5,000,000

Married Filing Jointly Rates

• 4.00%: Taxable income greater than $0
• 4.50%: Income between $17,151 and $23,600
• 5.25%: Income between $23,601 and $27,900
• 5.50%: Income between $27,901 and $43,000
• 6.00%: Income between $161,551 and $323,200
• 6.85%: Income between $323,201 and $1,077,550
• 9.65%: Income between $2,155,351 and $5,000,000
• 10.30%: Income greater than $5,000,000

New York’s state tax system is designed to ensure that those with higher incomes contribute a greater share, reflecting the principle of tax equity. This progressive nature means that individuals with lower incomes face relatively modest tax rates, while high-income earners are taxed more significantly. Importantly, each tax rate applies only to the portion of income within each bracket.

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New York State Sales Tax (2024)

In New York, the state sales tax rate is 4%, but the total sales tax rate can be higher due to additional local taxes imposed by counties and cities. For example, in some areas, the combined sales tax rate can reach up to 8.875% or more, depending on local rates. Notably, the Metropolitan Commuter Transportation District (MCTD) applies an additional 0.375% sales tax for taxable sales made within its boundaries​.

You can find the specific sales tax rates for different jurisdictions using the New York State Department of Taxation and Finance’s sales tax rate lookup tool​.

New York State Tax Department

New York State Property Tax (2024)

Property taxes in New York are levied by local governments, and the rates can vary widely depending on the location. The state does not impose a statewide property tax; instead, local municipalities set their own tax rates based on the assessed value of properties.

In 2024, New York State continues to offer various property tax relief programs, such as the School Tax Relief (STAR) program, which provides exemptions for eligible homeowners to reduce school property taxes​.

New York State Tax Department

The exact property tax rate for any given area can typically be found on local county or city government websites.

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Local Tax Withholding

Local tax withholding is another consideration for New York residents, particularly those living in New York City and Yonkers:

• New York City: Residents pay additional city income tax, with rates ranging from 3.078% to 3.876%. The rate depends on the individual’s income and filing status. This tax is unique to New York City residents and contributes to funding services like public schools, transportation, and other infrastructure.

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• Yonkers: Residents of Yonkers pay a 16.75% surcharge on their New York State taxes, making the overall local tax contribution quite significant compared to other regions. This surcharge directly supports local government operations and public services in Yonkers.

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These local taxes are particularly significant for individuals living and working in the metropolitan area, contributing to their overall effective tax rate and reducing take-home pay.

FICA and State Insurance Taxes in New York in 2024

FICA Taxes are federal payroll taxes under the Federal Insurance Contributions Act, consisting of contributions to Social Security and Medicare. Both employees and employers contribute to FICA, which helps fund these programs:

• Social Security: Withheld at 6.2% on income up to $168,600 in 2024. This tax funds the Social Security program, which provides benefits for retirees, disabled individuals, and survivors of deceased workers.
• Medicare: Taxed at 1.45% on all wages. High-income earners are subject to an additional 0.9% Medicare tax on wages exceeding $200,000 (for single filers). Medicare provides healthcare coverage for those over 65 and certain younger individuals with disabilities.

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Additionally, State Insurance Taxes in New York include:

• Unemployment Insurance (UI): Employers in New York are required to pay into the state’s unemployment insurance program. The rate depends on the company’s experience rating—employers with higher claims may pay higher rates.

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• Disability Insurance: Employers also pay a small premium for disability benefits insurance. This helps provide temporary cash benefits to eligible employees who cannot work due to non-work-related injuries or illnesses.

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Pre-Tax Deductions in New York in 2024

Pre-Tax Deductions are crucial for reducing an employee’s taxable income, thereby decreasing the overall amount of taxes owed. Common pre-tax deductions for New York residents include:

• Health Insurance Premiums: Contributions toward medical, dental, and vision insurance offered by employers are generally deducted from wages before federal, state, and local income taxes are applied. This lowers the taxable income and thus reduces the tax liability.
• 401(k) Contributions: Contributions to a 401(k) retirement savings plan are deducted from wages pre-tax. For 2024, the contribution limit is $23,000, with an additional $7,500 allowed for individuals aged 50 or older (catch-up contributions).

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• Health Savings Accounts (HSAs): Employees enrolled in high-deductible health plans (HDHPs) may contribute to an HSA. These contributions are pre-tax, reducing taxable income. For 2024, the limits are $4,150 for individuals and $8,300 for families. HSAs can also accrue interest or earnings, which grow tax-free.
• Flexible Spending Accounts (FSAs): Contributions to an FSA for health care expenses are also deducted pre-tax, with a limit of $3,050 in 2024. These funds can be used for qualified medical expenses, helping reduce out-of-pocket costs.

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• Commuter Benefits: New York City employees can take advantage of pre-tax commuter benefits, such as paying for public transportation passes or parking expenses. The IRS sets limits on how much can be contributed pre-tax to commuter benefits, which helps reduce an individual’s taxable income and costs associated with daily commuting.

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Summary Table of Taxes in New York in 2024

Median Household Income in New York

The median household income in New York is a key indicator of the state’s economic conditions and reflects the financial well-being of its residents. It provides insight into the earnings landscape, cost of living, and general standard of living for households in the state. As of 2023, the median household income in New York was $82,095, which is notably higher than the national median income. This figure highlights that New York is a relatively affluent state, owing largely to its diverse and thriving economy.

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New York Tax Brackets in 2024

New York utilizes a progressive state income tax system to determine how much residents pay in state income taxes. In 2024, New York’s tax brackets are structured to ensure that individuals with higher incomes contribute a larger portion of their earnings to state taxes, while those earning less are taxed at lower rates. The goal of this system is to create a more equitable tax structure, spreading the tax burden in line with individuals’ ability to pay.

Single and married filing separately

Married filing jointly or qualifying widow(er)

Head of household

Note: If your 2023 New York state AGI was $107,650 or less, and your NYS taxable income was less than $65,000, use the New York state tax tables instead.

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Purpose and Implications of New York’s Progressive Tax System

This tax structure aims to achieve fairness in the taxation process by ensuring that those who can afford to pay more, do so, helping to fund critical public services, including education, healthcare, and infrastructure. The income tax collected supports a range of programs aimed at benefiting New York residents, from public schools to social welfare programs.

By employing a progressive tax system, New York attempts to balance its need for revenue with the goal of avoiding excessive financial burdens on lower-income households. High-income earners contribute proportionally more, which helps support state-funded initiatives that can, in turn, improve the quality of life across the state, including both urban and rural areas.

In summary, the median household income in New York is a significant metric of economic well-being, reflecting the opportunities available to residents and the state’s economic growth trajectory. The state tax brackets are designed to ensure an equitable distribution of the tax burden, with progressive rates that ensure higher earners contribute appropriately to public funds, supporting infrastructure, public services, and the community at large.