Individual Income Tax

New York is a rolling Internal Revenue Code conformity state, and therefore adopts most federal provisions, unless otherwise specified. The computation of your New York State income tax is based on your New York AGI, which is your federal AGI modified by certain New York adjustments and/or subtractions.

You may take either the New York standard deduction or the New York itemized deduction, both of which are state defined. Exemptions are only available for qualifying dependents claimed.

Here are the 2019 standard deduction amounts:

The New York state income tax rate varies from 3.078% to 3.876%. The amount depends on your filing status and total taxable income.

Although a rolling conformity state, New York became the first state to decouple from particular features of the CARES Act, also known as the Coronavirus Aid, Relief, and Economic Security Act, which was created in response to the pandemic.

They specifically decouple from the temporary deferral of the business loss limitation for non-corporate taxpayers. However, New York state does provide its own net operating loss deduction and carryback regime.

New York does not conform to the Internal Revenue Code (IRC) section 199A, also known as the QBI deduction.

S-Corporation Income Tax

New York requires S corporations to file a New York S-election form to be considered an S corporation to New York. Additionally, New York S corporations are required to pay the corporate franchise tax based on New York receipts.

For New York S corporations, the corporation franchise tax generally is based on the corporation’s New York receipts, as follows:

  • receipts not more than $100,000 = $25
  • receipts more than $100,000 but not over $250,000 = $50
  • receipts more than $250,000 but not over $500,000 = $175
  • receipts more than $500,000 but not over $1,000,000 = $300
  • receipts more than $1,000,000 but not over $5,000,000 = $1,000
  • receipts more than $5,000,000 but not over $25,000,000 = $3,000; and
  • receipts over $25,000,000 = $4,500.

New York S corporations that are also eligible qualified New York manufacturers pay 50% of the foregoing amounts. Also, additional rules not covered here apply to non-New York S corporations.

LLC/Partnership Income Tax

New York LLCs and partnerships are not required to pay income tax to the state. They are however subject to the “State Filing Fee”, based on business’ New York gross income:

  • gross income not more than $100,000 = $25
  • gross income more than $100,000 but not over $250,000 = $75
  • gross income more than $250,000 but not over $500,000 = $175
  • gross income more than $500,000 but not over $1,000,000 = $500
  • gross income more than $1,000,000 but not over $5,000,000 = $1,500
  • gross income more than $5,000,000 but not over $25,000,000 = $3,000; and
  • gross income over $25,000,000 = $4,500.

A regular New York partnership is only subject to the state filing fee if it has more $1 million in gross income, as follows:

  • gross income more than $1,000,000 but not over $5,000,000 = $1,500
  • gross income more than $5,000,000 but not over $25,000,000 = $3,000; and
  • gross income over $25,000,000 = $4,500.

C-Corporation Income Tax

New York C corporations are subject to the Corporate franchise tax, which is the highest of: entire net income, business and investment capital, minimum taxable income, or fixed dollar minimum. All four are described below.

Corporate Franchise/Privilege Tax

New York has a corporation franchise tax, which applies to both traditional (C-type) corporations and to S corporations, and a tax known simply as the “filing fee,” which applies to LLCs, limited liability partnerships (LLPs), and some regular partnerships.

For traditional corporations, the amount of corporation franchise tax due is the highest of the following four amounts:

  • the corporation’s entire net income (ENI)
  • the corporation’s business and investment capital
  • the corporation’s minimum taxable income (MTI); or
  • a fixed dollar minimum (FDM) tax.

Let’s look briefly at each of these items.

Entire Net Income (ENI) is based on federal taxable income with certain New York-specific modifications. The default tax rate for ENI is 7.1%. However, lower rates apply to small business taxpayers, as follows:

  • ENI base of $290,000 or less = 6.5% tax rate; and
  • ENI base of more than $290,000 but not more than $390,000 = $18,850 plus 7.1% of the amount over $290,000 plus 4.35% of the amount over $350,000.

Also, a lower rate of 6.5% applies to qualified New York manufacturers.

Business and Investment Capital is the total investment and business capital allocated to New York State after deducting short-term and long-term liabilities attributable to assets. It is taxed at a rate of 0.16%. The tax is capped at $350,000 for qualified New York manufacturers, and $1 million for all other taxpayers.

Minimum Taxable Income (MTI) is a business’s entire net income allocated to New York State plus certain federal tax preferences and adjustments that are allocated to New York. The current rate for most corporations is 1.5%. For eligible qualified New York manufacturers, the rate is 0.75%.

The Fixed Dollar Minimum (FDM) tax is based on a corporation's New York State receipts, as follows:

  • receipts not more than $100,000 = $25
  • receipts more than $100,000 but not over $250,000 = $75
  • receipts more than $250,000 but not over $500,000 = $175
  • receipts more than $500,000 but not over $1,000,000 = $500
  • receipts more than $1,000,000 but not over $5,000,000 = $1,500
  • receipts more than $5,000,000 but not over $25,000,000 = $3,500; and
  • receipts over $25,000,000 = $5,000.

Additional Information

Businesses in New York city or Yonkers may be subject to local income or franchise tax.

If your business was formed or is located in another state, but generates income in New York, it may be subject to New York taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.

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