New York State Income Tax Rate 2021

What Is Tax Abatement In Nyc

A tax abatement is a tax break on property or business taxes. Owners of co-ops and condos in NYC who meet certain requirements can qualify to have their property taxes reduced. The requirements include using the co-op or condo as a primary residence, not owning more than three residential units in any one development , and not being part of the Urban Development Action Area Program.

New York Issues Guidance On The Application Of Tax Credits On Combined Returns

New Jersey has indicated that with respect to combined returns, tax credits belong to the taxable member that earned them unless a specific statute authorizes the tax credit to be earned or awarded at the group level. Any credit carryover available for future use belongs to the taxable member that originally earned the credit. If a member leaves the group, that member takes with them any tax credit/carryforward they generated. Any carryforward must be reduced by the amount that is used by the group and/or member. For specific details, please consult New Jersey Division of Taxation Technical Bulletin TB-90 .

New York Releases Details Of Pending Marijuana Law

New York state lawmakers released details of the new law legalizing recreational marijuana, which recently passed the state Senate. The legislation provides licensing requirements for marijuana producers, distributors, and retailers. It creates a social and economic equity program to assist individuals disproportionately impacted by cannabis enforcement that want to participate in the industry. The law provides for a 9% state excise tax and 4% local excise tax rate on the retail sales price of marijuana. Dispensaries may be allowed to open as early as 2022.

Distributors will be required to collect an excise tax based on the potency of the amount of THC, the active ingredient in cannabis. The law plans to tax raw flowers at 0.5 cents per milligram of THC, cannabis concentrate at 0.8 cents per milligram, and edibles at 3 cents per milligram.

The bill establishes the Office of Cannabis Management to put in place a framework that would cover medical, adult-use, and cannabinoid hemp. The tax revenue generated will be used to operate the state cannabis program and related social programs.

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New York Governor Signs 2022

By Barry Halpern, Partner, Tax & Business Services & , Senior Manager, Tax & Business Services

On April 11, 2022, New York Governor Kathy Hochul signed the states Fiscal Year 2022-23 budget bill.

Among its various provisions, the plan includes suspension of the states gas tax, personal income tax cuts for middle-class income earners, and an elective New York City pass-through entity tax. The plan also creates and extends various tax credits and incentives.

Below are some highlights of the bill:

The Nyc Enhanced Real Property Tax Credit

This credit is offered to renters and to homeowners living in residences that weren’t totally exempted from real property taxes during the tax year. Your household income must be less than $200,000 as of 2021.

You must have resided within the city for the entire year and in the same residence for at least six months. You can’t be claimed as a dependent on anyone else’s federal tax return. This credit can be as much as $500.

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New York Faces Revenue Shortfalls Due To Tax Paying Residents Moving Out

Approximately 115,000 New York State residents left between 2015-2019, taking their tax dollars with them.The rise of remote work due to the COVID-19 pandemic has further increased the volume of residents moving out of state. According to New York State Comptroller Thomas P. DiNapoli, the states largest revenue source is from personal income tax, which accounts for 2/3 of state revenues. The largest number of departures came from married filers who were earning between $100k-$500k, and these individuals typically paid a substantial amount of tax. As a result of these departures, state and local tax authorities are challenged with finding new revenue sources to replace the taxes lost due to residents leaving the state.This will likely take the form of increased audit activity of departing residents. Please note that former New York State residents often continue to have New York Source income particularly if they have deferred compensation and/or stock options.New York is aggressively auditing former residents who fail to report state source income and pay the associated tax. If you are considering changing your tax residence, or have received an audit notice, please contact a member of the Withum SALT team.

May 20, 2022

New York City Income Tax Rates

New York City has four tax brackets ranging from 3.078% to 3.876%. Rates kick in at different income levels, depending on your filing status.

The lowest rate applies to single and married taxpayers who file separate returns on incomes of up to $12,000 as of the tax year 2021, the return you’ll file in 2022. Those who are married and who file joint returns qualify for the lowest rate on incomes of up to $21,600.

The next tax brackets jump to 3.762%, then to 3.819%, then to 3.876%.

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State Income Tax Brackets

Youll note that in our discussion of tax rates above that we used the term taxable income. This is different from actual income earned, because it accounts for tax deductions and exemptions. In New York, the standard deduction for a single earner is $8,000 . This means that when calculating New York taxes, you should first subtract that amount from your income .

New York Property Tax

Property taxes are assessed exclusively by counties and cities in New York State, which means that rates vary significantly from one place to the next. Effective rates – taxes as a percentage of actual value as opposed to assessed value – run from less than 0.7% to about 3.5%.

Surprisingly, the city with the lowest effective property tax rate is New York City, where property taxes paid total an average of just 0.88% of property value. The reason for that relatively low rate is that the taxable value of most residential property in New York City is equal to just 6% of the market value. That is, if your home is worth $500,000, you will only be charged taxes on $30,000 of that amount. Outside of New York City, however, rates are generally between 2% and 3%.

Regardless of city, if you are looking to refinance or purchase a property in New York with a mortgage, check out our guide to mortgages in New York. Weve got details on average mortgage rates and other information about getting a mortgage in the Empire State. You can also use our New York property tax calculator to find out what you would pay in property taxes in New York.

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New York State Budget Bill Highlights

The States 2022-2023 Budget Bill, S8009, has been passed by the New York State Legislature. The budget includes:

• A motor fuel tax holiday from June 1 through December 31, 2022
• An accelerated phase-in of the middle-class tax cuts
• A city pass-through entity tax for eligible city partnerships and resident S corporations
• A supplemental earned income tax credit equal to 25% of the 2021 EITC benefit and
• A supplemental empire state child tax credit for families with children over the age of four, which would be calculated based on the taxpayers 2021 Empire State Tax Credit.

Also enacted in the Budget Bill are new tax credits, such as the COVID-19 capital costs tax credit and several other tax credits, including NYCs theatrical and musical production company credit.

In addition, the states pass-through entity tax workaround has been revised. New York created two classes of S corporations for purposes of the PTET computation: the electing resident S corporation and the electing standard S corporation. That said, the PTET computation remains the same for electing standard S corporations, which are S corporations making the PTET election but do not certify that all of their shareholders are residents of New York. The PTET is still limited to New York source income, even if the entity has New York resident shareholders.

Note that certification to be taxed as an electing resident S corporation for this year must be made by March 15, 2023.

Getting Your New York Tax Refund

If your state tax witholdings are greater then the amount of income tax you owe the state of New York, you will receive an income tax refund check from the government to make up the difference.

It should take one to three weeks for your refund check to be processed after your income tax return is recieved. E-filing your return and filing early can help ensure your refund check gets sent as quickly as possible.

Once you’ve filed your tax return, all you have to do is wait for your refund to arrive. If you want to check the status of your New York tax refund, you can visit the New York Income Tax Refund page.

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New York State Enacts Tax Increases In Budget

On April 19, 2021, Gov. Andrew Cuomo signed the FY21-22 New York State budget legislation that increases income tax rates on corporations and high-income individuals and enacts a pass-through entity tax applicable to partnerships and S corporations.1 The legislation also reinstates and increases the alternative tax on business capital and creates an addback for federal opportunity zone gains. The tax revisions are significant, not only with respect to the material tax rate increases that were ultimately enacted, but with respect to several proposed tax changes contained in earlier versions of the bills that were ultimately omitted from the final legislation.

Tax rate increase for taxpayers with New York State income over $5 million

Alternative tax on business capital reinstated and increased to 0.1875%

For taxable years beginning in 2021, 2022, and 2023, the New York State alternative tax on business capital will be reinstated and set at 0.1875%.5 Small business taxpayers, cooperative housing corporations, and qualified New York manufacturers continue to benefit from a zero percent tax rate. The business capital tax rate prior to 2016 had been 0.15% and was gradually being phased out of existence, with the rate previously scheduled to go to zero percent in 2021.6 New York City did not plan to phase out its tax on business capital and continues to impose a 0.15% tax on business capital.7

Addback for federal opportunity zone gains

New York Temporarily Suspends Hotel Occupancy Tax

New York City Mayor Bill de Blasio has issued an executive order suspending the 5.875% hotel occupancy tax imposed by NYC Administrative Code Section 11-2502from June 1, 2021, through August 31, 2021. The daily hotel room tax under NYC Administrative Code§ 11-2502remains in effect. For additional information, please see the executive order released on May 18, 2021.

May 13, 2021

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New York Tax Brackets 2022

Looking at the tax rate and tax brackets shown in the tables above for New York, we can see that New York collects individual income taxes differently for Single versus filing statuses, for example. We can also see the progressive nature of New York state income tax rates from the lowest NY tax rate bracket of 4% to the highest NY tax rate bracket of 10.9%.

For single taxpayers living and working in the state of New York:

• Tax rate of 4% on the first $8,500 of taxable income.
• Tax rate of 4.5% on taxable income between $8,501 and $11,700.
• Tax rate of 5.25% on taxable income between $11,701 and $13,900.
• Tax rate of 5.85% on taxable income between $13,901 and $80,650.
• Tax rate of 6.25% on taxable income between $80,651 and $215,400.
• Tax rate of 6.85% on taxable income between $215,401 and $1,077,550.
• Tax rate of 9.65% on taxable income between $1,077,551 and $5,000,000.
• Tax rate of 10.3% on taxable income between $5,000,001 and $25,000,000.
• Tax rate of 10.9% on taxable income over $25,000,000.

For married taxpayers living and working in the state of New York:

New York Finalizing $212 Billion Dollar Budget Deal

On April 6, 2021, Governor Andrew Cuomo announced an agreement has been reached on the $212 billion budget for the fiscal 2022 year. Included in the budget is New Yorks own version of a workaround to the federal limitation of the state and local tax deduction. The Tax Cut and Jobs Act imposed a $10,000 limitation on the amount of state and local tax that individuals may deduct for federal income tax. Some states, including New Jersey and Connecticut, responded by enacting various workaround bills in an effort to mitigate the impact of the limitation on their state residents. Similarly, New York is planning to impose an entity level tax that would provide a offset credit to the individuals of the flow-through entity to get around the $10,000 limitation.

A brief overview of some other items included in the budget bill include the following:

• The corporate franchise tax rate would temporarily be raised to 7.25% from 6.5% for three years.
• For tax years beginning on or after January 1, 2021, and prior to January 1, 2024, the business capital tax base is reinstated
• The capital base tax was supposed to be fully phased out beginning January, 1, 2021.
• As part of the phase out, the tax rate for the capital base tax had been reduced each year 0.075% for 2018 0.050% for 2019 0.025% for 2020).
• Going forward, the capital base tax will be imposed at a rate of 0.1875%, and therefore this reinstatement also comes with a rate increase.

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Nys And Yonkers Withholding Tax Changes Effective January 1 2022

We revised the 2022 New York State personal income tax rate schedules to reflect certain income tax rate reductions enacted under the Tax Law. We also updated the New York State and Yonkers resident withholding tax tables and methods for 2022. These changes apply to payrolls made on or after January 1, 2022.

• Calculate 2022 New York State withholding tax amounts using Publication NYS-50-T-NYS , New York State Withholding Tax Tables and Methods.
• Calculate 2022 Yonkers resident and nonresident withholding tax amounts using Publication NYS-50-T-Y , Yonkers Withholding Tax Tables and Methods.
• NOTE: There were no changes to the New York City resident wage bracket tables and exact calculation methods. Please continue to use Publication NYS-50-T-NYC , New York City Withholding Tax Tables and Methods.

Real Estate Transfer Tax

The legislation deems anyone who is an officer, employee, manager, or member under a duty to act for a corporation, partnership, LLC, or individual proprietorship to be a person responsible for complying with the provisions of the states real estate transfer tax. The legislation also clarifies that responsibility for the tax lies with the grantor. This provision applies to conveyances made on or after July 1, 2021, except for conveyances that are made pursuant to binding written contracts entered into on or before April 1, 2021, provided that the date of contract execution is confirmed by independent evidence.

In addition, publicly traded companies, REITs, and mutual funds that are members of LLCs are exempt from the requirement to disclose all of their members/shareholders on a real estate transfer tax return in a sale of a building with up to four residential units. The legislation does not make corresponding changes to the New York City real property transfer tax.

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New York City Legislation To Suspend Commercial Rent Tax

As a result of the pandemic, Keith Powers, New York City Councilman has introduced new legislation to suspend the commercial rent tax for three years. This suspension would affect spaces rented by businesses below 96th Street in Manhattan that are solely for the purpose of trade, business, profession, vocation or commercial activity. As of the date of introduction, the Bill has support from Councilman Powers as well as six additional City Council members. New York City has only regained about 71 percent of jobs lost during the pandemic, and about 26,000 city businesses have permanently closed since the COVID-19 pandemic began in March of 2020. Council members in support of the legislation were quoted stating that commercial rent tax punishes restaurants and retail shops for paying high rents and the legislation would provide relief to help recover jobs, foot traffic and businesses.

May 27, 2022

New York Releases Advisory Opinion On Sales For Solar Energy Systems

The New York Department of Taxation and Finance issued an Advisory Opinion on the application of sales and use tax on the sale and installation of residential and commercial solar energy systems. Petitionerstwo partnerssold commercial and residential solar energy systems to customers primarily located in upstate New York. One partner procured and provided components required for the installation of the solar energy systems, and the other partner was responsible for the transportation and installation at customers sites. The Department concluded that retail sales and installations of both residential and commercial solar energy systems were exempt from sales tax but are exempt from local tax only if the locality has enacted the exemption. Please see New York Advisory Opinion No. TSB-A-20S for further discussion.

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A Complete Guide To New York Payroll Taxes

In New York, calculating taxes is a little more difficult than in other states. The state as a whole has a progressive income tax that ranges from 4% to 10.9 percent, depending on how much money an employee makes. In New York State, an employee’s tax burden varies depending on where they work.

Residents of New York City and Yonkers, in particular, are subject to higher income taxes. Of course, if you don’t want to be in financial and legal trouble, you can’t afford to ignore commitments like taxes and payrolls. Heres an article that summarizes all your New York Payroll related laws and taxes. Following are the topics involved: