Yonkers Income Tax: Resident Surcharge vs Nonresident Rate

A tax on a tax

How is the Yonkers resident surcharge calculated?

The Yonkers resident surcharge is not a direct tax on your income. Instead, it is calculated as a percentage of your New York State income tax liability. The mechanics work like this:

1. Calculate your New York State income tax on Form IT-201 as normal.
2. Take that state tax amount and multiply by 16.75%.
3. The result is your Yonkers resident surcharge.

This structure means the effective rate on your gross income is substantially lower than 16.75%. For example, if you earn $80,000 and your NY State tax liability is approximately $4,200, your Yonkers surcharge would be about $703 — an effective rate of roughly 0.88% on your gross income, not 16.75%.

Worked example: $100,000 salary, single filer, Yonkers resident

Illustrative example using approximate 2025/2026 rates and the standard deduction. Use our New York State take-home calculator for a personalized estimate.

How does the nonresident Yonkers earnings tax work?

If you live outside Yonkers but earn wages by physically working within Yonkers city limits, you owe a flat 0.5% of those Yonkers-source wages. This is a straightforward percentage of gross wages — no brackets, no state-tax-based calculation.

You report this on Form Y-203 (Yonkers Nonresident Earnings Tax Return), which is filed alongside your NY State return. Your employer should withhold this tax if they know you work in Yonkers. If they do not, you are responsible for paying it when you file.

Important: if you work remotely from your home outside Yonkers for a Yonkers-based employer, you generally do not owe the nonresident earnings tax because you are not physically performing services in Yonkers. The tax is based on where the work is performed, not where the employer is located.

How does Yonkers tax differ from the NYC income tax?

Despite being geographically adjacent, the two local taxes have almost nothing in common mechanically:

You never pay both taxes simultaneously. If you move from Yonkers to NYC (or vice versa), you file a part-year return for each jurisdiction covering the period you lived there.

What about remote workers and the convenience rule?

New York's convenience-of-the-employer rule can affect your state tax if you telecommute from outside New York, but it does not affect the Yonkers local taxes. The Yonkers resident surcharge applies only if you are a Yonkers resident, and the nonresident earnings tax applies only if you physically work within Yonkers city limits.

If you moved out of Yonkers and now work from home in another state, you will not owe the Yonkers surcharge. You may still owe NY State tax under the convenience rule if your employer is based in New York, but that is a separate issue.

What happens if you move into or out of Yonkers mid-year?

If you move your primary residence into Yonkers partway through the year (say, from Manhattan or from out of state), you are a part-year Yonkers resident. You owe the 16.75% surcharge only on the portion of your NY State tax liability that corresponds to the period you lived in Yonkers. You file Form IT-360.1 to prorate your liability.

Conversely, if you move out of Yonkers to NYC mid-year, your Yonkers surcharge stops from the move date and the NYC income tax starts from that date. You would file a part-year return for each jurisdiction. The key is the date your primary residence changed — not your mailing address or employer location.

For the nonresident earnings tax, days of work physically performed in Yonkers before and after your move date must be tracked separately. The 0.5% applies only to wages earned while you were a nonresident working within city limits.

What if your employer withholds Yonkers tax incorrectly?

Incorrect withholding typically occurs in two scenarios:

• You live in Yonkers but your employer does not withhold the surcharge. Some payroll systems outside Westchester County may not recognize Yonkers as a separate taxing jurisdiction. In this case, you will owe the surcharge in full when you file your IT-201. To avoid a large year-end bill, file Form IT-2104 with your employer requesting additional state withholding to cover the surcharge.
• Your employer withholds Yonkers tax but you do not live there. If you live outside Yonkers and your employer incorrectly applies the Yonkers surcharge or nonresident tax, file your IT-201 with your correct home address. The return will calculate zero Yonkers liability and the over-withheld amount appears as part of your state refund.

In either case, the correction flows through your annual state return. There is no separate Yonkers refund form — the state return handles all Yonkers adjustments.

Who is exempt from the Yonkers nonresident earnings tax?

The 0.5% nonresident earnings tax applies narrowly to wages earned by physically working within Yonkers. Several categories of workers are generally not subject to it:

• Remote workers who never set foot in a Yonkers office — the tax requires physical presence.
• Independent contractors who perform services in Yonkers may owe the tax on net self-employment income, but only for work physically done in the city.
• Yonkers residents do not pay the nonresident tax — they pay the surcharge instead (the two never overlap).

If you split your work between Yonkers and another location, you allocate wages based on days or hours worked in each location. Only the Yonkers-source portion is subject to the 0.5%.