New York Income Tax: 2026 Brackets, Rates & How NY Taxes Your Equity Compensation

New York income tax is progressive, ranging from 4% up to a top rate of 10.9%, and New York City residents owe an extra 3.078% to 3.876%. NY taxes RSUs and other equity as ordinary income and withholds supplemental wages at a flat 11.70%, which over-withholds most tech workers. If you work in tech in New York -- Wall Street fintech, Manhattan startups, or Brooklyn's tech corridor -- your state and local tax burden can exceed 14% before a single federal dollar is owed.

This guide covers the complete New York income tax picture for the 2025 tax year: brackets for all filing statuses, the NYC income tax, supplemental withholding rates, and how NY taxes RSUs, ISOs, and other equity compensation.

New York Income Tax Brackets (2025 Tax Year)

A critical fact about New York: NY does NOT index tax brackets for inflation. Unlike federal brackets (which adjust annually), New York's brackets stay the same year after year unless the legislature explicitly changes them. The brackets below are the same as 2024.

Single / Married Filing Separately

Married Filing Jointly

New York Standard Deduction (2025)

New York's standard deductions are more generous than California's ($8,000 vs. $5,706 for single filers) but still far below the federal amounts ($15,000 single / $30,000 MFJ).

New York City Income Tax

If you live in New York City, you pay an additional NYC income tax on top of the New York State tax. NYC has its own progressive bracket system:

The top NYC rate of 3.876% applies to all taxable income over $50,000. Combined with the state rate, a NYC resident in the 6.85% state bracket pays an effective combined state + city rate of 10.726%. High earners in the 9.65% state bracket face a combined rate of 13.526% -- rivaling California's top rate.

NYC Residency Rules for Equity Compensation

New York's residency rules create unique complications for tech workers, especially those working remotely.

The 183-day rule: You're a "statutory resident" of New York if you maintain a permanent place of abode in NY and spend more than 183 days in the state during the year. This is separate from domicile -- you can be a statutory resident of NY while domiciled elsewhere.

Domicile vs. statutory resident: Domicile is where you intend to make your permanent home. Statutory residency is a separate test based on physical presence + a place of abode. You can owe NY tax under either test. Many tech workers who think they "moved" to another state but keep a NYC apartment get caught by the statutory resident test. If you relocated mid-vesting, see our guide to moving states mid-year with equity for how the income gets allocated.

The "convenience of the employer" rule: This is New York's most controversial tax rule. If your employer is located in New York and you work remotely from another state, New York taxes your income as if you were working in NY -- unless the remote work is a "necessity of the employer" (e.g., the employer has no NY office for your role). This means:

• A Google employee based in NYC who works remotely from New Jersey may still owe NY tax on all income, including RSU vesting
• The burden of proof is on the taxpayer to show the remote work was necessary for the employer
• This rule has been challenged in court but remains in effect

New York Supplemental Withholding Rate: 11.70%

New York's supplemental withholding rate is 11.70%. This is the flat rate your employer withholds on RSU vesting income, bonuses, and other supplemental wages for New York state purposes. (The parallel federal rules on withholding from supplemental wages are set out in IRS Publication 15.)

The Over-Withholding Problem

Here's something unusual about New York: the supplemental rate of 11.70% is higher than the marginal rate for most tech workers.

Most tech employees with income between $215,400 and $1,077,550 fall in the 6.85% bracket. But their employer withholds at 11.70% -- nearly 5% more than their actual rate.

Example: $100K RSU vest for someone in the 6.85% bracket

This means many New York tech employees get a substantial state tax refund each year from RSU vesting. The employer takes too much, and you get it back when you file.

Detailed example: $250K salary + $150K RSU vest, single filer

With $400K total income, you're in the 6.85% state bracket ($215,400-$1,077,550). The NY tax attributable to the $150K RSU income is approximately $10,275 (incremental method: total tax on $400K minus total tax on $250K). But your employer withheld $17,550 (11.70% of $150K).

That's $7,275 in cash flow you're lending to New York interest-free until you file. If you have predictable RSU vesting, you can adjust your W-4 to account for this and reduce over-withholding on your salary.

The over-withholding is only a problem in the sense that you're giving New York a free loan. But it does mean you're less likely to face a surprise state tax bill at filing time -- the opposite of the California situation.

How New York Taxes RSUs

New York taxes RSUs the same way as the federal government: as ordinary income when they vest. The full fair market value on the vesting date is included in your W-2 and subject to New York State income tax (plus NYC tax if applicable). This federal treatment of equity as ordinary, W-2-reported income is detailed in IRS Publication 525.

The withholding flow:

1. RSUs vest and shares land in your brokerage account
2. Your employer sells a portion to cover taxes
3. NY supplemental withholding: 11.70% of the vesting value
4. If you live in NYC, additional NYC withholding applies
5. You receive remaining shares

The refund vs. shortfall:

• Income below $1,077,550: likely over-withheld (refund)
• Income above $1,077,550: 9.65% bracket, still somewhat over-withheld
• Income above $5,000,000: 10.3% bracket, closer to actual rate

For most tech employees, New York's aggressive supplemental withholding means you'll get money back at tax time rather than owe. Use our RSU Calculator to see your exact New York withholding situation.

The chart below shows how the effective tax rate on RSU income climbs as total compensation rises:

For an in-depth look at how RSU withholding works across federal, state, and FICA, see our RSU tax withholding guide. For a New York-specific walkthrough of how each vest is taxed and withheld, see our guide to New York RSU vesting and withholding tax.

How New York Taxes ISOs

Unlike California, New York conforms to the federal treatment of ISOs. This means:

• ISO exercises are not taxed as ordinary income for NY purposes
• The bargain element (spread) on an ISO exercise is only relevant for federal AMT, which is computed on IRS Form 6251
• New York has no state AMT, so ISO exercises have no immediate NY tax consequence
• You only owe NY tax when you sell the shares (either as ordinary income for a disqualifying disposition or as capital gains for a qualifying disposition)

This is a significant advantage over California, where ISO exercises trigger immediate state ordinary income tax. A New York resident who exercises $200K worth of ISOs owes no NY state tax on the exercise -- they only face federal AMT.

Key difference from California:

For modeling the federal AMT impact of ISO exercises, use our ISO AMT Calculator. For more on AMT planning, see our AMT calculator guide for stock options. And for how this conformity plays out for New York filers in practice, read our deep dive on New York ISO exercises and the state AMT picture.

New York Has No State AMT

New York does not impose a state-level Alternative Minimum Tax. This means the only AMT consideration for New York residents is at the federal level.

This is another advantage over California, which imposes a 7% state AMT. For ISO holders, it means one fewer tax to model when planning exercises.

Capital Gains in New York

New York taxes capital gains as ordinary income -- there is no preferential state rate for long-term capital gains. Both short-term and long-term gains are taxed at your regular marginal rate (up to 10.9% state, plus up to 3.876% NYC).

This matches California's treatment. A New Yorker selling $500K of appreciated stock pays up to 10.9% to New York (+ up to 3.876% to NYC) plus up to 20% (+ 3.8% NIIT) federally -- a combined rate that can approach 39%. One important exception worth checking before you sell: qualifying startup shares may escape part of this bill under New York's treatment of the QSBS (Section 1202) exclusion.

How 401(k) Contributions Affect Your NY Tax

Maxing out your 401(k) reduces your adjusted gross income, which directly reduces your New York State taxable income. For high earners near bracket thresholds, this can produce outsized savings.

Example: Consider an employee earning $1,100,000 (salary + RSUs). Without a 401(k) contribution, they're in the 9.65% bracket ($1,077,550+). With a maximum $23,500 contribution (2025 limit), their AGI drops to $1,076,500 -- just below the 9.65% threshold, keeping them in the 6.85% bracket.

The federal savings from the 401(k) contribution are much larger (reducing 37% bracket income), but the NY savings are a bonus. For employees near the $1,077,550 threshold, the 401(k) contribution provides a 2.8% additional state tax benefit on the marginal dollars.

New York Income Tax vs. California: Key Differences

If you're choosing between New York and California (or comparing offers), here's how the two states stack up for equity compensation. The chart below puts the headline state rates side by side across major states:

Planning Tips for New York Tech Employees

1. Don't confuse over-withholding with over-taxation. New York's 11.70% supplemental rate may over-withhold, but your total state tax bill is still calculated at your marginal rate. The refund is nice but doesn't change your actual tax burden.

2. Factor in NYC tax for residency decisions. The 3.876% NYC tax is substantial. An employee earning $300K who lives in NYC pays roughly $11,600 more per year than someone who lives in Westchester, Long Island, or New Jersey (though NJ has its own taxes).

3. Take advantage of NY's ISO conformity. Unlike California, ISO exercises in New York carry no state tax consequence. This makes multi-year ISO exercise planning somewhat simpler -- you only need to optimize for federal AMT.

4. Plan for the $1,077,550 bracket jump. NY's jump from 6.85% to 9.65% at $1,077,550 is steep. If a large RSU vest or stock sale pushes you above this threshold, consider whether timing equity events across years could keep you in the lower bracket.

For a comparison across states, see our State Income Tax Guide and the individual guides for other calculator-supported states: Illinois, Massachusetts, New Jersey, and Oregon. For federal tax bracket planning, see the 2026 Federal Tax Brackets guide. If NY is over-withholding on your RSUs, our guide on how RSUs affect your tax refund explains what to expect at filing time. For effective rates at different income levels, see our RSU tax rate guide.

Frequently Asked Questions

What is New York's top income tax rate? New York's top state income tax rate is 10.9%, which applies to taxable income over $25,000,000 for single filers. However, most high-earning tech workers fall in the 6.85% bracket ($215,400-$1,077,550) or the 9.65% bracket ($1,077,550-$5,000,000). If you live in New York City, add up to 3.876% in city income tax, bringing the combined rate to as high as 14.776%.

Do I pay NYC tax on RSU income? Yes, if you are a New York City resident. NYC taxes all income including RSU vesting at rates up to 3.876%. NYC residency is based on where you live, not where you work. If you maintain a permanent place of abode in NYC and spend more than 183 days in the city, you are a statutory resident and owe NYC tax on all your income.

What is the NYC residency test? NYC uses two tests: the domicile test (where you intend to make your permanent home) and the statutory resident test (maintaining a permanent place of abode in NYC + spending more than 183 days in the city). You can owe NYC tax under either test. Many tech workers who keep a NYC apartment but work elsewhere get caught by the statutory resident rule.

Does New York tax stock options exercised while I lived there? New York follows federal ISO treatment, so ISO exercises are not subject to NY ordinary income tax -- only federal AMT. However, for non-qualified stock options (NSOs), the exercise spread is taxed as ordinary income by NY. If you exercised NSOs while living in New York and then moved, NY may still claim tax on a portion based on the allocation of work-days in NY during the option period.

How does New York's supplemental withholding compare to marginal rates? New York's supplemental withholding rate of 11.70% exceeds the actual marginal rate for most tech workers. If your income falls in the 6.85% bracket ($215,400-$1,077,550), your employer over-withholds by nearly 5% on every RSU vest. This means most NY tech employees get a substantial state tax refund each year -- the opposite of California, where the supplemental rate often under-withholds.

Can I reduce my NY tax with 401(k) contributions? Yes. 401(k) contributions reduce your adjusted gross income, which reduces your NY taxable income. This is especially valuable if you're near the $1,077,550 threshold where the rate jumps from 6.85% to 9.65%. A maximum $23,500 contribution (2025 limit) could keep you in the lower bracket and save hundreds in state tax, on top of the federal savings.