State-by-State Guide to Taxes on Retirees
Tool | December 2020

New York State Tax Guide for Retirees

State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees.

New York

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The Bottom Line
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Least Tax-Friendly

The Empire State's heavy tax burden carries over into retirement—especially when it comes to property taxes. New York's median property tax rate is tied for the 7th-highest in the U.S. There are some property tax breaks for seniors, though. For instance, local governments and public-school districts can reduce the assessed value of their home by 50% for qualifying seniors.

Sales taxes are high in New York, too. The state's average combined state and local tax rate is the 10th-highest in the nation.

When it comes to income taxes, New York's tax bite is less severe for retirees when compared to other states. Social Security benefits, federal and New York government pensions, and military retirement pay are exempt. However, anything over $20,000 from a private retirement plan (including pensions, IRAs and 401(k) plans) or out-of-state government plan is taxed.

New York also has an estate tax with a special "cliff" feature that can result in a big tax bill when you die.

Income Tax Range

Low: 4% (on up to $8,500 of taxable income for single filers and up to $17,150 for married couples filing jointly)

High: 8.82% (on taxable income over $1,070,550 for single filers and over $2,155,350 for married couples filing jointly)

For 2021, the top rate is 10.9% on taxable income over $25 million (regardless of filing status).

New York City and Yonkers impose their own income tax. A commuter tax is also imposed on residents of New York City, as well as on residents of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester Counties.

Taxation of Social Security Benefits

Social Security benefits are not taxed by the state.

Tax Breaks for Other Retirement Income

Income from federal government, New York state and local government, and military retirement plans is exempt.

In addition, 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.

Railroad Retirement benefits are fully exempt.

Sales Tax

4% state levy. Localities can add as much as 4.875%, and the average combined rate is 8.52%, according to the Tax Foundation. In the New York City metro area, there is an additional 0.375% sales tax to support transit.

Groceries: Exempt
Clothing: Exempt if under $110
Motor Vehicles: Taxable
Prescription Drugs: Exempt

Real Property Taxes

In New York, the median property tax rate is $1,692 per $100,000 of assessed home value.

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 between $3,000 and $29,000 (up to $50,000 in New York City). Under the so-called sliding-scale option, localities may also grant an exemption of less than 50% to senior citizens with yearly incomes between $29,000 and $37,399.99. New York City allows income to reach $58,399 for age-qualifying seniors.

There is also an Enhanced STAR program for seniors. The Enhanced STAR exemption is available for the primary residences of senior citizens (age 65 and older) with annual household incomes not exceeding the statewide standard. Combined income must be $88,050 or less for 2020, $90,550 or less for 2021. For qualifying senior citizens, the Enhanced STAR program exempts the first $66,800 (for 2019 to 2020 school tax bills) of the full value of their home from school property taxes.

Annual Car Taxes and Fees

No annual vehicle tax or fee is imposed.

Estate and Inheritance Taxes

For 2021, estates exceeding $5.93 million are subject to New York's estate tax (the exemption threshold is adjusted each year for inflation). Taxable gifts made by the decedent as a New York resident within three years prior to death are included as part of the estate. Tax rates range from 3.06% to 16%.

The New York estate tax is a "cliff tax." 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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