New York State Taxes: What You’ll Owe in the 2026 Tax Season

The top income tax rate in New York is among the highest in the nation. New York also has some of the highest sales and property tax rates in the country, though rates vary depending on where you live within the state. The state ranks last on the Tax Foundation’s 2026 Competitiveness Index.

The big picture:

• Income tax: The state has a progressive income tax with nine brackets for the 2025 tax year and rates ranging from 4 percent to 10.9 percent, depending on a resident’s taxable income and filing status. Residents of New York City and Yonkers also pay local income tax.
• Property tax: The average property tax rate in New York was 1.3 percent, although actual rates vary by county, according to the Tax Foundation’s most recent data.
• Sales tax: The combined average state and local sales tax rate is 8.54 percent, according to the Tax Foundation.

How is income taxed?

The state has a progressive income tax with nine brackets for the 2025 tax year and rates ranging from 4 percent to 10.9 percent, depending on a resident’s taxable income and filing status. If a resident’s New York adjusted gross income exceeds $107,650, the taxpayer must also calculate and pay a supplemental tax that recaptures the tax benefit that results from income in the lower brackets being taxed at lower rates.

Taxpayers with income above $107,650 will additionally have to complete a tax computation worksheet to calculate how much the state will “recapture” from the portions of their income that fell into lower brackets. This amount is calculated based on earnings and tax-filing status (single, married filing jointly, married filing separately, head of household or qualifying surviving spouse). Check New York Form IT-201 (for residents) and Form IT-203 (for nonresidents/part-year residents) for filing information. More details are available here.

What about investment income?

Capital gains from investments (including proceeds from property sales) are treated as ordinary personal income and are taxed at the same rates.

Are Social Security benefits taxed?

New York does not tax Social Security benefits, though residents may be required to pay federal taxes on those benefits.

How is property taxed?

The average property tax rate in New York was 1.3 percent, although actual rates vary by county, according to the Tax Foundation’s most recent numbers. The rates ranged from 0.56 percent in Kings County to 2.41 percent in Monroe County. Actual median rates paid ranged from $2,440 in Franklin County to more than $10,000 in six counties: Putnam, Suffolk, Rockland, Westchester, Nassau and New York.

What about sales and other taxes?

• Sales tax: The combined average state and local sales tax rate is 8.54 percent, according to the Tax Foundation. The state has a 4 percent sales tax rate, and the average local sales tax rate is 4.54 percent. The maximum local sales tax rate is 4.875 percent. Exemptions to state sales tax include clothing and footwear that costs less than $110 (though local sales tax may apply), most food and health supplements, college textbooks and service dogs. A list of more exempt goods is available here.
• Gas and diesel: In 2026, gasoline is taxed at 23.85 cents per gallon, while diesel is taxed at 22.05 cents per gallon.
• Vehicle tax: Vehicle purchases include the state’s 4 percent sales tax plus any local taxes.
• Alcohol: Consumers pay state and local sales tax for alcohol.
• Lottery: Lottery winnings are subject to local, state and federal taxes, but the amount varies depending on where you live and if you’ve moved to another state. More information is available at Publication 140-W. State law does require the New York Lottery to withhold state income tax at the highest rate of tax from any prize in excess of $5,000. In addition, the New York Lottery withholds 3.876 percent for residents of New York City and 1.82575 percent for residents of Yonkers.

Will my heirs or estate have to pay inheritance and estate tax?

New York has an estate tax with rates ranging from 3.06 percent to 16 percent after the exemption of $7,160,000 for the estates of people who died in 2025. For those who die in 2026, the exemption is $7,350,000. Residents can calculate the estate tax for a decedent using the correct ET-706 form for the year that the person died. More information is available here.

Are there any tax breaks for older residents?

• Senior citizens exemption: Eligible residents can reduce the assessed value of their homes by as much as 50 percent to lower their property taxes. You must be 65 or older and meet certain income limitations, which are set by local jurisdictions, as well as other requirements. Municipalities may also use a sliding scale for partial tax relief for seniors with incomes higher than the local limit. For example, the highest income limits to obtain a 20 percent exemption would be $55,700; the highest for a 10 percent exemption income would be $57,500; and for a 5 percent exemption, the highest a resident’s income could be is $58,400. However, limits are set locally. Note that each county, city, town, village or school district also sets a maximum income limit between $3,000 and $50,000 for the full 50 percent exemption. Residents can contact their local assessor to learn more. Income is based on federal adjusted gross income and does not vary based on filing type.
• Pension income exclusion: The state offers an income tax exemption on the first $20,000 of pension and annuity income — up to $40,000 for married couples — for those 59.5 or older.
• Real property tax credit: An income tax credit is available to qualified residents who have a household income of $18,000 or less and pay real property taxes or rent for their residences. For most people, the annual credit tops out at $75. However, if at least one member of your household is 65 or older, the credit can be as much as $375.
• Enhanced STAR benefits: Under the basic School Tax Relief ­— STAR ­— program, eligible homeowners can get either a partial exemption or a credit for school district property taxes. However, residents age 65 or older with incomes below a certain level may qualify for enhanced STAR benefits. The 2026 income threshold is $110,750 (it was $107,300 for 2025).

Are military retirement pension benefits taxed?

Military retirement pension benefits are exempt from taxation in New York.

What is the deadline for filing taxes in 2026?

Income tax returns for the 2025 tax year are due April 15, 2026.

 

More AARP Financial Resources

• AARP Retirement Calculator Determine if you are saving enough to retire when — and how — you want.
• AARP’s Social Security Calculator Figure out when to claim and how to maximize your Social Security benefits.
• AARP Tax Tools Explore resources to help you calculate and prepare taxes.