How to Calculate NYC Tax: Form IT-201, Credits, and UBT

To calculate your NYC income tax, apply the city’s four progressive brackets, which run from 3.078% to 3.876%, to your New York State taxable income, then subtract any city-specific credits. The math happens inside your state return on Form IT-201; there is no separate city return for full-year residents. One threshold matters before you do any math: the tax applies only to residents of the five boroughs. If you live outside the city but commute in for work, you owe New York State tax on those wages but no city personal income tax.¹

The Rates and Brackets

The city tax is progressive, so only the income within each bracket is taxed at that bracket’s rate. All filing statuses use the same four percentages; the dollar thresholds differ.

Single or Married Filing Separately

Up to $12,000: 3.078%
$12,001 to $25,000: 3.762%
$25,001 to $50,000: 3.819%
Over $50,000: 3.876%

Married Filing Jointly or Qualifying Surviving Spouse

Up to $21,600: 3.078%
$21,601 to $45,000: 3.762%
$45,001 to $90,000: 3.819%
Over $90,000: 3.876%

Head of household thresholds sit between the single and joint ranges and use the same four rates. The exact figures appear in the NYC tax rate schedule inside the Form IT-201 instructions.²

Notice how quickly the top bracket arrives. A single filer hits 3.876% at $50,001, and a joint filer hits it at $90,001. The spread between the lowest and highest rate is less than a point, so for most working residents the bulk of income is taxed near the top rate.

Running the Calculation on Form IT-201

You do not file a separate NYC return. The city tax is computed on Form IT-201, the full-year resident income tax return.³ The flow is:

Finish the state portion of IT-201 first. Your New York State taxable income lands on line 38.
If you were a full-year city resident, enter that same line 38 figure on line 47 as your NYC taxable income.
If line 47 is under $65,000, look up your tax in the NYC Tax Table. If it is $65,000 or more, calculate it using the bracket structure above. Enter the result on line 47a.
Subtract NYC credits on lines 48 and 53.
Add any additional city taxes on line 51 if they apply to you.

The city tax then rolls into your total state liability and gets paid or refunded through the same return. E-filing software handles the arithmetic, but knowing where the numbers come from lets you check the output and plan ahead.²

A Worked Example

Take a single filer with $75,000 of NYS taxable income. The city tax works out this way:

3.078% on the first $12,000 = $369
3.762% on the next $13,000 = $489
3.819% on the next $25,000 = $955
3.876% on the remaining $25,000 = $969

That totals $2,782 before any credits, on top of federal and state income tax.

Credits That Reduce the Tax

Several credits apply only to city residents and come off the tax dollar for dollar, which makes each one worth more than an equivalent deduction.

NYC School Tax Credit

Most city residents qualify. The fixed-amount portion is up to $125 for joint filers and up to $63 for everyone else, available when income is $250,000 or less and you cannot be claimed as a dependent on someone else’s return. A separate rate-reduction amount is available for residents with NYC taxable income of $500,000 or less, calculated as a percentage of that income. Both parts are refundable, so you receive them even if your city tax is zero.⁴ This is distinct from the STAR property tax benefit, which does not appear on your income tax return.⁵

NYC Household Credit

This nonrefundable credit is aimed at low-income residents. Single filers with federal AGI of $12,500 or less receive up to $15. Joint filers, heads of household, and qualifying surviving spouses with AGI of $22,500 or less receive a credit based on the number of exemptions claimed. The amounts are small but automatic if you qualify.⁴

NYC Earned Income Credit

If you qualify for the federal EITC, the city gives you a local version equal to a percentage of your federal credit, with lower-income households getting a larger match rate. You claim the federal EITC first; the NYC amount flows from that on your state return.⁴

NYC Child and Dependent Care Credit

Parents may qualify for a city credit worth up to 75% of the state child and dependent care credit. The requirements are a child under age four, federal AGI of $30,000 or less, and prior qualification for the state-level credit.⁴

If You’re Self-Employed: The UBT and Its Credit

Freelancers, sole proprietors, and partners in unincorporated businesses face a tax that salaried workers do not: the Unincorporated Business Tax, a flat 4% on net business income allocated to New York City.⁶ A built-in credit erases the entire UBT when liability is $3,400 or less, with a partial credit for liabilities between $3,401 and $5,400. The UBT is filed separately with the NYC Department of Finance on Form NYC-202 for sole proprietors or Form NYC-204 for partnerships, not on your state return.

To prevent double taxation, city residents who pay UBT can claim a credit against their personal income tax using Form IT-219. If your city taxable income is $42,000 or less, the credit covers 100% of the UBT paid. The credit phases down and settles at 23% once taxable income reaches $142,000 or more. It cannot exceed your city personal income tax liability and cannot be refunded or carried forward.⁷

If You Moved Into or Out of the City

Part-year residents calculate the city tax differently. You complete Form IT-360.1, Change of City Resident Status, along with Form IT-201, and the form prorates city tax based on the income attributable to the months you lived in the city.⁸ The part-year tax from IT-360.1 goes on line 50 of your IT-201.

Watch out for special accruals. When you change residency, income items that have become fixed and determinable but are not yet received must be allocated between your resident and nonresident periods. A bonus earned and guaranteed before you moved out, but paid after your move, can still count as resident-period income. You can skip the special accruals by posting a bond or security on Form IT-260 or IT-260.1 equal to the extra city tax that would be due if those items were included.

1
New York State Department of Taxation and Finance. Frequently Asked Questions About Filing Requirements, Residency, and Telecommuting
2
New York State Department of Taxation and Finance. Instructions for Form IT-201 Full-Year Resident Income Tax Return
3
New York State Department of Taxation and Finance. Enhanced Form IT-201, Resident Income Tax Return
4
New York State Department of Taxation and Finance. New York City Credits
5
New York State Department of Taxation and Finance. STAR Resource Center
6
NYC Department of Finance. Unincorporated Business Tax (UBT)
7
New York State Department of Taxation and Finance. Instructions for Form IT-219 Credit for New York City Unincorporated Business Tax
8
New York State Department of Taxation and Finance. Instructions for Form IT-360.1 Change of City Resident Status