NYC Income Tax: Rates, Brackets and Who Pays

Residency determines everything

Who actually pays NYC income tax?

Only people whose primary residence is within the five boroughs of New York City — Manhattan, Brooklyn, Queens, the Bronx and Staten Island — owe this tax. The critical test is domicile: where you maintain your permanent home. If you own a co-op in Brooklyn but spend most of the year in Connecticut, New York may still consider you a statutory resident if you maintain a permanent place of abode in NYC and spend more than 183 days there.

Part-year residents owe NYC tax only on income earned during the portion of the year they lived in the city. You file Form IT-360.1 to allocate income between your NYC-resident and non-resident periods.

Nonresidents do not pay NYC income tax. This surprises many commuters who assume that working in Manhattan triggers a city tax. It does not. You will owe New York State income tax on wages earned in the state, but the separate city tax is purely residence-based. If your employer mistakenly withholds NYC tax, you can claim a refund when you file your state return.

How are the NYC tax brackets structured?

NYC uses a graduated rate schedule similar in concept to the federal system. Your city taxable income — which generally matches your New York State taxable income — is divided into brackets, and each bracket is taxed at a progressively higher rate. The lowest bracket begins at 3.078% and the highest rate reaches 3.876% for income above the top threshold.

Unlike a flat city tax (such as the ones used in Ohio or Missouri cities), the NYC system means that lower-income residents pay a somewhat lower effective city rate. However, the spread between the lowest and highest rate is relatively narrow — less than one percentage point — so the progressive effect is modest compared to federal brackets.

The IT-201 return calculates your NYC tax automatically. You enter your NYC taxable income on the designated line, look up the tax in the city rate schedule and enter the result. Tax software handles this seamlessly.

How does NYC tax stack with federal and state tax?

A NYC resident faces four layers of payroll-related tax on earned income:

1. Federal income tax — graduated brackets from 10% to 37%
2. FICA — 7.65% for Social Security and Medicare combined (employee share)
3. New York State income tax — graduated brackets from 4% to 10.9%
4. NYC income tax — 3.078% to 3.876%

For a single filer earning $100,000, the combined marginal rate can exceed 45% when all layers are stacked. That makes NYC one of the highest-taxed jurisdictions in the country for W-2 employees. The federal SALT deduction cap ($10,000 for most filers) limits how much of this state and city tax burden you can offset on your federal return.

Worked example: $85,000 salary, single filer, full-year NYC resident

This is an illustrative example using approximate 2025/2026 rates and the standard deduction. Your actual liability depends on deductions, credits and filing status. Use our NYC take-home pay calculator for a personalized estimate.

What about remote workers who left NYC?

If you physically relocated your primary residence out of NYC — say, to New Jersey or Connecticut — you generally stop owing NYC income tax from the date you moved. You would file a part-year resident return for the portion of the year you lived in the city.

However, there is an important state-level wrinkle. New York applies the convenience-of-the-employer rule: if your employer is based in New York and you work remotely from another state for your own convenience (rather than because the employer requires it), New York State may still tax those wages. This affects your NY State tax but does not re-trigger the NYC city tax once you have moved your residence out of the five boroughs.

This distinction matters. A remote worker who moved from Brooklyn to Hoboken still owes NY State income tax on wages under the convenience rule, but does not owe the additional 3%+ NYC tax. That difference alone can save thousands per year.

What if your employer withholds NYC tax incorrectly?

Incorrect withholding happens most often when an employer's payroll system defaults to the office address rather than the employee's home address. If you live outside NYC and see NYC tax on your paystub:

1. Notify your payroll department immediately and provide your correct home address.
2. File a new Form IT-2104 (Employee's Withholding Allowance Certificate) indicating your actual residence.
3. When you file your annual NY State return (IT-201), report your correct address. The return will calculate zero NYC tax and the over-withheld amount will appear as a refund.

Do not wait until year-end — correcting withholding mid-year prevents you from giving the city an interest-free loan.

How is NYC tax different from Yonkers tax?

Yonkers, located just north of the Bronx, has its own separate local tax that works very differently from the NYC tax. Yonkers residents pay a surcharge equal to 16.75% of their New York State tax liability — not a percentage of income, but a percentage of the state tax itself. Yonkers nonresidents who earn wages in the city pay a flat 0.5% of those wages. Neither the Yonkers tax nor the NYC tax overlaps: you pay one or the other based on where you live, never both. For details, see our Yonkers income tax page.