The “NY NYC Inc” line on your paycheck represents the New York City income tax, a levy imposed on individuals who live or work in the city. This tax is separate from the New York State income tax and funds city services and infrastructure. As of 2024, New York City’s tax rates for residents are progressive, ranging from 3.078% to 3.876%, depending on taxable income. These rates are applied to your federal adjusted gross income, with specific modifications to determine the amount owed to the city.

Education Credits

These threshold amounts may be adjusted annually to reflect changes in the Consumer Price Index. After pay day, these checks are refunded to OPA and the earnings and deductions that were produced when the check was issued are reversed. Your pay statement will reflect the earnings and deductions from the check until it is refunded. If you received benefits due to Workers’ Compensation or Line-of-Duty Injury (LoDI), you may receive a W-2c Statement of Corrected Wage and Tax Amounts. Based on the date of approval or payment to your agency, the adjustments may not occur until a subsequent year. The City paid your Social Security (Box 4) and Medicare (Box 6) taxes.

Your 2024 Federal Income Tax Comparison

However, there are some loopholes that could help you avoid paying personal income tax in the future. Certain non-residents are also required to pay NYC income tax, particularly employees of the city who live outside its borders. For example, individuals working for the city under specific employment contracts or agreements may be subject to Bookkeeping for Chiropractors NYC income tax even if their home address is in a neighboring region. In addition to New York state income tax, residents of New York City are also subject to additional income taxes. For the 2024 tax year (filed in 2025), New York City has four tax brackets for the 2024 tax year, ranging from 3.078% to 3.876%. Non-residents may also benefit from tax credits that alleviate double taxation.

The NYC Child and Dependent Care Credit

• However, there are legal strategies you can use to minimize or avoid paying NYC city tax.
• Programs like the state’s School Tax Relief (STAR) indirectly benefit city residents by reducing their property tax burden.
• You may need additional information to meet the legal requirements for starting or operating your business.
• If you own real estate in the city, you’d be required to pay property taxes.
• NYC Tax Calculator – Quickly estimate your New York City taxes with ease!

Your employer will match the amount you pay in FICA taxes, so the total contributions are doubled. It’s worth noting that if you are self-employed, you will have to pay the entire amount yourself, though the who pays new york city income tax good news is that you can deduct the employer portion. The penalty for late filing or late payment in New York City is 0.5% of the unpaid amount for each month (or part of a month) it is not paid, up to a maximum of 25%.

• The penalty for late filing or late payment in New York City is 0.5% of the unpaid amount for each month (or part of a month) it is not paid, up to a maximum of 25%.
• In New York City, individuals are required to file their income tax returns in a timely manner.
• These rates are applied to your federal adjusted gross income, with specific modifications to determine the amount owed to the city.
• You use information found on your W-2 to file your federal, state, and local tax returns.
• Wealthier individuals pay higher tax rates than lower-income individuals.

On December 27, 2023, the New York State Department of Taxation and Finance published a new set of regulations for the New York State corporate tax. DOF’s new regulations will be substantially similar to the state’s, with several notable differences. If the name, Social Security number, or amount of wages or taxes is incorrect on your W-2, contact your agency payroll office. They will research the problem and forward a W-2 Correction Request form along with documentation to OPA. For administrative help regarding the new Form W-4, please contact the human resources/payroll office at your agency. For more detailed assistance on what financial information unearned revenue to use in the new Form W-4, please contact a tax professional.

• So if you owe $5,000 in taxes and are eligible for a tax credit of $500, you only need to pay $4,500 total.
• This means that, if you’ve already tried offsetting what you owe with state income tax credits, you’re out of options for further reducing your taxes.
• We will review your question and any response will be published in the Frequently Asked Questions (FAQs) above.
• New York City offers a Child and Dependent Care Credit for full-year and part-year residents.
• In December 2024, Mayor Eric Adams introduced a proposal to reduce or eliminate NYC personal income tax for low-wage earners.
• Meanwhile, New York City also levies its own income taxes, which means residents of the Big Apple pay some of the nation’s highest local rates.
• It’s important to note that these rates may change, so always refer to the most recent information provided by the New York State Department of Taxation and Finance.

States With Local Income Taxes

For example, taxpayers eligible for the New York State EITC automatically receive a city-level EITC, calculated as 5% of the state credit. Programs like the state’s School Tax Relief (STAR) indirectly benefit city residents by reducing their property tax burden. New York City’s income tax is based on your New York State taxable income, which is your gross income less any New York State tax deductions you can claim. There are no tax deductions specifically for the New York City income tax, although there are income tax credits. While state tax rates range from 4% to 10.9% depending on income, the city’s rates are lower but add an additional layer of taxation for residents. Together, these taxes make NYC one of the highest-taxed jurisdictions in the country.

The state applies taxes progressively (as does the federal government), with higher earners paying higher rates. For your 2024 taxes (which you’ll file in early 2025), only individuals making more than $25,000,000 pay the top rate, and earners in the next bracket pay 0.6% less. Joint filers face the same rates, with brackets approximately double those of single filers. For example, the upper limit of the first bracket goes up from $8,500 to to $17,150 if you’re married and filing jointly.