NEW YORK
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NICKNAME
The Empire State
BOTTOM LINE: NOT TAX-FRIENDLY
Although New York offers generous tax exemptions for retirees, the state has some of the highest property taxes in the U.S. On average, New Yorkers fork over 12% of their income in state and local taxes, according to the Tax Foundation. But retirees catch several breaks. The state does not tax Social Security benefits or public pensions. There is also an exemption of up to $20,000 for private pensions and out-of-state government pensions. The state has enacted a temporary income-tax rate of 8.82% on households with taxable income above $2 million for married couples filing jointly. New York state law gives local governments and public school districts the option of granting a reduction on the amount of property taxes paid by qualifying seniors 65 and older.
STATE SALES TAX
4% (food and prescription and nonprescription drugs are exempt). Other taxing entities may add up to 5% in additional sales tax.
INCOME-TAX RANGE
Low: 4.0% (on up to $8,000 of taxable income for single filers and $16,000 for married couples filing jointly)
High: 8.82% (on taxable income over $1 million for single filers and $2 million for married couples filing jointly)
SOCIAL SECURITY
Benefits are not taxed.
EXEMPTIONS FOR OTHER RETIREMENT INCOME
Military, civil-service, and New York state and local government pensions are exempt. Up to $20,000 of qualified private pensions for people 59 1/2 and older are also exempt. Out-of-state government pensions can be deducted as part of the $20,000 exemption.
PROPERTY TAXES
Real estate is taxed on the local level. A taxpayer's primary residence may be partially exempt from school taxes under the state's School Tax Relief (STAR) Program. The Basic STAR exemption is available for owner-occupied, primary residences for people with a combined income of less than $500,000, regardless of the owners' ages. Basic STAR exempts the first $30,000 of the full value of a home from school taxes.
Tax breaks for seniors: New York State law gives local governments and public-school districts the option of granting a reduction on the amount of property taxes paid by qualifying senior citizens by reducing the assessed value of residential property owned by seniors by 50%. To qualify, seniors must be 65 or older and meet certain income limitations and other requirements. For the 50% exemption, the law allows each county, city, town, village or school district to set the maximum income limit at any figure between $3,000 and $29,000. Localities have the further option of granting an exemption of less than 50% to senior citizens whose incomes exceed the local income limit by less than $1,000 in three income ranges or $900 in six other income ranges. There is no general, statewide homestead property-tax exemption.
There is also a STAR program for seniors. The Enhanced STAR exemption is available for the primary residences of senior citizens (age 65 and older) with yearly household incomes not exceeding the statewide standard. Combined income must be less than $79,050 for 2012. For qualifying senior citizens, the Enhanced STAR program exempts the first $62,100 (for the 2011-12 school-tax bill) and $62,200 (for the 2012-13 school-tax bill) of the full value of their home from school property taxes.
INHERITANCE AND ESTATE TAXES
There is no inheritance tax. Estates exceeding $1 million are subject to estate tax, with a top rate of 16%.
Visit RetirementLiving.com for a complete rundown of taxes in New York.
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