New York City Income Tax Rates and Credits

New York City is famous for many things: bagels that ruin all other bagels, subway announcements that sound like
riddles, and a local income tax that quietly rides shotgun on your New York State return. If you’re a NYC resident,
you don’t just pay federal and state income taxyou also pay city income tax. The good news: NYC also offers
a lineup of credits that can shrink your bill (and sometimes even boost your refund).

This guide breaks down how NYC income tax works, the current bracket structure, and the credits that matter most
with clear examples and a few sanity-saving tips. (Because taxes are already dramatic enough; they don’t need to be
Broadway dramatic.)

NYC Income Tax in Plain English

Who pays New York City income tax?

In general, NYC personal income tax applies to New York City residentspeople who live in one of the
five boroughs (Bronx, Brooklyn, Manhattan, Queens, Staten Island). If you’re a nonresident who works
in NYC but lives elsewhere (New Jersey, Long Island outside city limits, upstate, etc.), you typically do
not owe NYC income tax just because your job is in the city.

How do you pay it?

NYC income tax is reported on your New York State return (not a separate city return for most people).
Your employer may withhold it from your paycheck if your work/payroll setup indicates NYC residency, but the final
calculation happens when you file.

What income is taxed?

NYC income tax is based on your New York City taxable income, which is tied to your New York State
calculations (starting with New York adjusted gross income, then applying deductions and exemptions as applicable).
Translation: it’s not “just your salary.” It’s your taxable base after the usual tax-return machinery does its thing.

New York City Income Tax Rates

NYC uses a graduated rate structure with four brackets. For many filers, the “headline” takeaway is
simple: NYC rates range from 3.078% to 3.876%. But the bracket thresholds depend on
filing status, so let’s put it in an easy-to-scan table.

NYC tax rate schedule (tax year 2025)

Note: If your NYC taxable income is below a certain level, you may use a city tax table instead of the rate schedule.
The schedule below applies to NYC taxable income at or above that threshold.

How NYC Tax Is Calculated (Without Crying)

The city tax calculation usually follows this sequence:

1. Start with your New York numbers (NY adjusted gross income).
2. Apply deductions and exemptions to arrive at NYC taxable income.
3. Use the NYC tax table (for lower taxable income) or the NYC tax rate schedule (for higher taxable income).
4. Subtract NYC credits you qualify for.
5. Compare to withholding and paymentsthen you either pay the difference or get a refund.

Example: Married filing jointly with $80,000 NYC taxable income

Assume a couple filing jointly has $80,000 of NYC taxable income.
That falls in the $45,000 to $90,000 bracket for joint filers.

• Base tax: $1,545
• Excess over $45,000: $80,000 − $45,000 = $35,000
• Apply 3.819% to the excess: $35,000 × 0.03819 = $1,336.65
• Total NYC tax (before credits): $1,545 + $1,336.65 = $2,881.65

Then you subtract any NYC credits you qualify for. If you’re eligible for refundable credits, they can reduce your
NYC tax to zero and still increase your refund.

NYC Credits That Can Lower Your Tax Bill

Here’s where NYC gets slightly nicer. (Not “free-rent-in-SoHo” nicejust “okay, I’ll take it” nice.)
NYC offers several credits that can reduce what you owe. Some are refundable (meaning you can get money
back even if your tax hits zero), and others are nonrefundable (they can lower tax, but won’t create a refund
by themselves).

1) New York City Earned Income Credit (NYC EIC) refundable

If you qualify for and claim the federal Earned Income Tax Credit (EITC), NYC may give you an additional
refundable credit. The NYC EIC is calculated as a percentage of your federal EITC, and the percentage typically
depends on your income level.

Why it matters: for eligible workers and families, stacking federal + state + city EITC can be one of the biggest refund
boosters available.

2) New York City Child and Dependent Care Credit refundable (full-year), partially refundable (part-year)

Paying for child care can feel like you’re financing a tiny Ivy League educationexcept the student is three and thinks
pants are optional. NYC offers a credit for certain taxpayers who pay qualifying child-care expenses.

Key idea: if you qualify for the New York State child and dependent care credit, NYC may let you claim a city
credit too, potentially worth a large share of the state creditsubject to eligibility rules and income limits.

3) New York City School Tax Credit (fixed amount) refundable

This is one of the most talked-about NYC credits because it’s simple and fairly common:
if you’re a NYC resident, can’t be claimed as a dependent, and your income is within the limit,
you may qualify for a fixed school tax credit.

• Up to $125 for married filing jointly (and qualifying surviving spouse)
• Up to $63 for all other eligible taxpayers

Even if you don’t have school-age kids, this credit may still applybecause in NYC, everyone helps fund the city’s
schools one way or another (including your taxes doing interpretive dance across your paycheck).

4) New York City School Tax Credit (rate reduction amount) refundable

There’s also a “rate reduction” version that is tied to your NYC taxable income and has its own eligibility rules.
In real life, many tax software systems handle the decision between the fixed amount and the rate reduction automatically
when you enter the right residency and income info.

5) New York City Household Credit nonrefundable

The NYC household credit is aimed at lower-income residents who can’t be claimed as dependents.
It’s typically a smaller credit, but small credits still spend like normal dollars.

Practical tip: if your income is near the threshold, double-check your filing status and dependent entries. Household
credit eligibility can hinge on details that are easy to mistype, especially when you’re filing at midnight with a
cold slice of pizza as emotional support.

6) New York City Income Tax Elimination Credit can reduce NYC tax to (almost) nothing

This credit is designed to reduce or eliminate NYC tax for certain lower-income residents with dependents who meet
specific requirements (including income thresholds and limits on investment income).

If you qualify, it can be powerful because it’s aimed at wiping out what’s left of your NYC tax after certain other
credits are applied.

7) New York City Unincorporated Business Tax (UBT) Credit nonrefundable

Sole proprietors and certain other business owners may run into the NYC Unincorporated Business Tax.
NYC residents may be able to claim a credit against their NYC personal income tax for a portion of UBT paid,
with the credit amount influenced by city taxable income and other factors.

This one often shows up for freelancers, consultants, and small business ownersaka the people who know the thrill of
“I’m my own boss” and the horror of “I’m also my own payroll department.”

8) Pass-Through Entity Tax Credit (PTET) refundable

If you receive a PTET credit from an electing pass-through entity (like a partnership or S corporation that opted into
the PTET regime), you may be able to claim a refundable credit on your personal New York return.
It’s a specialized credit, but it can be meaningful for owners and members of pass-through businesses.

9) Central Business District Toll Credit refundable (for eligible residents)

If your primary residence is in NYC’s Central Business District (Congestion Relief Zone), your income is under the
threshold, and you paid qualifying tolls that weren’t business expenses, you may qualify for a refundable credit equal
to the tolls paid. This is a newer, highly specific creditbut if it applies to you, it’s worth real money.

Residency, Moving, and Other NYC Tax Plot Twists

Full-year vs. part-year NYC resident

If you moved into or out of NYC during the year, you may be a part-year resident. That can change:

• how your NYC tax is calculated,
• which credits you qualify for, and
• whether a credit is fully refundable or only partially refundable.

Moving tip: keep a simple paper trail of when you changed your primary residenceleases, closing documents, utility
start/stop dates. It’s boring documentation, but it’s the good kind of boring.

Commuters: “I work in NYCdo I owe NYC income tax?”

Usually, no. NYC personal income tax generally follows residency (living in NYC), not merely working there.
That said, your situation can get complicated if you’re a NYC employee in a special category or have unique payroll
arrangementsso don’t guess if your facts are unusual.

The “combined rate” reality check

People often talk about “NYC taxes” as if it’s one number. In reality, NYC residents can face combined marginal
rates when you stack federal + New York State + NYC. For higher earners, that combined marginal bite can be significant
which is why credits, deductions, and correct residency reporting really matter.

Practical Tips to Maximize NYC Credits (Legally)

Do a quick “credit sweep” before you hit submit

Before you file, do a last pass through common NYC credit triggers:

• EITC claimed federally? Check NYC EIC eligibility.
• Paying child care? Look at the NYC child and dependent care credit rules.
• Income within limits? Don’t miss the school tax credit and household credit.
• Dependents + lower income? See if the income tax elimination credit applies.
• Self-employed in NYC? Understand whether UBT and the related credit might apply.
• Pass-through business owner? Confirm any PTET credits you received.

Match your withholding to your reality

If you moved, changed jobs, or changed work location, your withholding might lag behind reality. Too little withholding
can create an unpleasant April surprise; too much withholding can turn your paychecks into an interest-free loan to the
government. Adjusting withholding is not glamorous, but neither is panic-paying a tax bill.

Keep records for anything “refundable and special”

Refundable credits can trigger extra scrutiny simply because they can generate refunds. Keep documentation for:

• child-care expenses (provider info, receipts, payments),
• earned income (especially if self-employed),
• residency dates if you moved,
• any toll statements if claiming a toll-related credit.

Frequently Asked Questions

Do I file a separate NYC income tax return?

Most residents report NYC income tax on their New York State income tax return. It’s calculated as part of
that filing process.

Is the NYC school tax credit only for parents?

Not necessarily. Eligibility generally depends on residency, dependency status, and income limitsnot whether you have
children in school.

If I live in NYC for part of the year, can I still get NYC credits?

Many NYC credits are available to part-year residents, but the amount and refundability rules can differ. Part-year
residency is one of those situations where details matter more than vibes.

Real-World Experiences: What NYC Tax Season Often Feels Like (And What People Learn)

To make this topic more relatable, here are common real-life “NYC tax moments” people run intobased on patterns tax
preparers and longtime residents talk about. Think of these as composite experiences, not one person’s story.

Experience #1: The “Why is my refund smaller?” first-year surprise

A lot of newcomers get their first NYC paycheck and think, “Okay, federal tax, state tax… wait, what’s this extra line?”
Then they file and realize NYC income tax is not a one-time fee; it’s an annual relationship. The lesson people learn
quickly is that NYC withholding isn’t “random”it’s tied to residency. If you live in the city, it’s part of the deal,
like alternate-side parking and the temptation to buy a $9 iced latte that tastes like ambition.

Experience #2: Moving mid-year and discovering “part-year resident” is a real thing

Someone moves from Jersey City to Brooklyn in August, updates their mailing address, and assumes taxes will sort
themselves out through vibes and good intentions. Then the return asks about how long you lived in NYC, and suddenly
exact dates matter. The most common takeaway: keep basic proof of your move (lease, closing docs, utility bills),
and don’t be shy about using part-year residency rules correctly. Filing accurately is how you avoid overpaying or
underpayingand avoid future letters that begin with “We need to talk.”

Experience #3: Families discovering the power of stacked credits

Families with modest to moderate incomes often have the biggest “aha” moments around credits. If they qualify for the
federal EITC, they learn New York State and NYC may add their own layerssometimes turning a scary tax season into a
meaningful refund. Parents paying for child care discover that certain city credits can piggyback on state credits,
and that the paperwork is worth it. The key lesson: credits aren’t “loopholes.” They’re built into the system to support
working familiesif you claim them correctly.

Experience #4: Freelancers learning that NYC taxes have a business side, too

NYC is full of freelancers, consultants, and side hustlers. Many start out thinking quarterly estimates are “optional”
until they meet the April balance due. Others discover that unincorporated business rules existand that NYC residents
may have a personal income tax credit connected to certain business taxes paid. Their recurring takeaway is brutally
practical: keep clean records, track income/expenses, and don’t wait until the last minute to understand how business
activity affects your personal tax return.

Experience #5: The “I’m eligible, but I didn’t claim it” regret

A surprisingly common NYC tax experience is learning about the school tax credit or household credit after filing,
usually from a friend who says, “Wait, you didn’t get that?” This leads to two habits people swear by going forward:
(1) a yearly checklist of residency and credit eligibility, and (2) slowing down just enough to review the credit section
before hitting submit. In NYC, you move fastjust not so fast you sprint past free money.

Conclusion

New York City income tax isn’t the biggest tax line item for most residentsbut it’s consistent, it adds up, and it’s
full of opportunities to reduce what you owe through credits. The smartest approach is to (1) confirm your NYC residency
status, (2) understand where your taxable income lands in the bracket schedule, and (3) run through the NYC credits list
like it’s a pre-flight checklist. Do that, and you’ll spend less time stressing and more time enjoying the part of NYC
that isn’t calculated in percentages.