The New York millionaire’s tax is a set of three top state income tax brackets — 9.65%, 10.30%, and 10.90% — that apply to taxable income starting at roughly $1 million for single filers and climbing to a top rate on income above $25 million. The brackets were enacted as temporary surcharges but have now been extended through the 2032 tax year. For New York City residents, the city’s own income tax pushes the combined top marginal rate to nearly 14.8%.
The Three High-Earner Brackets for 2026
New York Tax Law Section 601 sets up nine graduated income tax brackets. Most filers pay between 3.9% and 6.85%. The top three brackets are what people mean by the “millionaire’s tax”:1New York State Senate. New York Code TAX 601 – Imposition of Tax
- 9.65% on taxable income above the filing-status threshold up to $5 million
- 10.30% on taxable income above $5 million up to $25 million
- 10.90% on taxable income above $25 million
Only the income inside each bracket is taxed at that bracket’s rate. A single filer with $6 million of taxable income pays 9.65% on the slice between $1,077,550 and $5 million, 10.30% on the next $1 million, and the lower graduated rates on everything below $1,077,550.
Where the 9.65% Bracket Starts
The entry threshold for the first high-earner bracket depends on how you file:1New York State Senate. New York Code TAX 601 – Imposition of Tax
- Married filing jointly or surviving spouse: $2,155,350
- Head of household: $1,616,450
- Single or married filing separately: $1,077,550
The $5 million and $25 million thresholds for the 10.30% and 10.90% brackets are the same regardless of filing status.
The Recapture That Erases the Lower Brackets
A detail that catches high earners off guard: New York doesn’t just tax the excess income at the higher rate. A supplemental tax under Section 601(d) gradually claws back the benefit of the lower brackets, so the further your income climbs above a threshold, the more of your total income is effectively taxed at the higher rate.1New York State Senate. New York Code TAX 601 – Imposition of Tax
New York’s withholding tables show the practical effect. For a single filer earning between $1,077,550 and $5 million, the state withholds at an effective rate of about 10.45% on total wages. For someone above $25 million, that effective withholding rate climbs to roughly 11.70% on total wages.2New York State Department of Taxation and Finance. New York State Withholding Tax Tables and Methods You can’t look at the marginal rate and assume the lower brackets will meaningfully pull down your average.
What NYC Residents Pay on Top
New York City layers its own personal income tax on top of the state tax. The city’s top rate is 3.876%, applied to taxable income above $50,000 for single filers and $90,000 for joint filers.3Office of the New York City Comptroller. The NYC Personal Income Tax Before and After the Pandemic The state handles collection for both, and you file them together.
At the top state bracket, the combined marginal rate is 10.90% plus 3.876%, or 14.776%. Add the recapture and the combined effective rate runs higher still. That makes New York City one of the most heavily taxed jurisdictions in the country for high earners, and quarterly estimated payments need to cover both the state and city liability to avoid underpayment penalties.
What the Federal SALT Cap Leaves You With
The federal cap on state and local tax deductions is one of the biggest factors shaping what the millionaire’s tax actually costs. The 2017 Tax Cuts and Jobs Act limited the federal SALT deduction to $10,000, which hit high-income New Yorkers harder than taxpayers in almost any other state. A Congressional Research Service analysis found New York had the largest average gap in the country between eligible SALT payments and the capped deduction, around $43,200 per filer.4Congressional Research Service. The SALT Cap – Overview and Analysis
For the 2026 tax year, the SALT cap was raised to $40,400, a significant increase. But the cap begins phasing down for taxpayers with income above $505,000.5Bipartisan Policy Center. How Does the 2025 Tax Law Change the SALT Deduction For someone earning $2 million or more, the phase-down means the higher cap delivers less relief than it does to upper-middle-income filers. A New York City resident in the top combined bracket paying nearly 14.8% on millions of dollars still loses a large portion of the potential federal deduction.
The Pass-Through Entity Tax Workaround
New York enacted the Pass-Through Entity Tax under Tax Law Article 24-A in 2021 as a way for business owners to work around the SALT cap.6New York State. Pass-Through Entity Tax (PTET) The idea: instead of the owner paying state tax on their share of business profits at the individual level, the entity pays a state-level tax. The entity-level tax is fully deductible on the federal return as a business expense, bypassing the SALT cap. The owner then claims a credit on their New York personal return equal to the PTET paid, so the same income isn’t taxed twice.
PTET rates mirror the personal brackets for high earners: 6.85% on the first $2 million of entity taxable income, 9.65% between $2 million and $5 million, 10.30% between $5 million and $25 million, and 10.90% above $25 million. The election is open to partnerships, LLCs taxed as partnerships, and S corporations. It has to be made annually by the entity, and the credit flows through to each partner or shareholder by ownership share.6New York State. Pass-Through Entity Tax (PTET)
For a high-income business owner, this is one of the most valuable planning tools available. An owner earning $10 million through a partnership who elects the PTET can deduct the full state tax payment federally, saving hundreds of thousands compared to a capped SALT deduction. The trade-off is complexity: the election has to be timely, the credit calculation requires an addition modification on the personal return, and estimated payments on both sides need careful coordination.
If You Don’t Live in New York
New York taxes nonresidents on income earned from New York sources. If you live elsewhere but work in New York, earn rent from New York property, or run a business in the state, New York claims a piece. You report it on Form IT-203, which calculates your total income from all sources to determine the bracket, then applies that bracket rate only to the New York-source portion.7New York State Department of Taxation and Finance. Instructions for Form IT-203 Nonresident and Part-Year Resident Income Tax Return
Your bracket is set by worldwide income, not just what you earned in New York. A nonresident with $8 million total and $2 million sourced to New York pays the 10.30% bracket rate on that $2 million, even though New York income alone wouldn’t reach that bracket.
The Convenience of the Employer Rule
New York’s “convenience of the employer” rule is one of the most aggressive nonresident tax positions in the country. If your employer’s office is in New York and you work remotely from another state for your own convenience rather than because your employer requires it, New York treats those remote workdays as New York workdays.8New York State Department of Taxation and Finance. TSB-M-06(5)I – New York Tax Treatment of Nonresidents and Part-Year Residents Your employer withholds New York tax on your full salary, and you’re left trying to claim a credit on your home state return.
The reliable ways around it are narrow: have your employer establish a legitimate office at your remote location that qualifies as a “bona fide employer office” under state guidelines, or be formally assigned to a non-New York office you use regularly. Even a handful of days physically spent in New York during the year can trigger the rule for the entire year’s compensation. For a high earner telecommuting from New Jersey or Connecticut while nominally assigned to a Manhattan office, this can add hundreds of thousands in New York tax.
Statutory Residency Audits
New York’s definition of resident goes well beyond where your driver’s license was issued. Under Tax Law Section 605(b), you’re a tax resident if you’re domiciled in the state, or if you maintain a permanent place of abode in New York and spend more than 183 days of the year in the state.9New York State Senate. New York Code TAX 605 – Definitions That second path, statutory residency, is where the Department of Taxation and Finance finds most of its audit targets among high earners who claim to have left the state.
A “permanent place of abode” is broadly defined. It doesn’t have to be a home you own. An apartment you rent year-round, a family member’s home where you keep a room, or any dwelling with basic living facilities you maintain for substantially all of the year can qualify. If the state can show you had access to such a place and spent more than 183 days in New York, you’re a resident on all your worldwide income.
For taxpayers who have moved out but still earn significant income in New York, residency audits are thorough. Auditors reconstruct your days using cell phone records, credit card statements, and E-ZPass data, then weigh factors like the comparative use of your homes, where you keep sentimental items, where your family lives, and your continuing involvement in New York businesses. The best defense is contemporaneous documentation of where you were each day. Taxpayers who try to reconstruct this evidence after the audit notice arrives almost always lose.
Estimated Payments and the 110% Safe Harbor
If you expect to owe at least $300 in New York State, New York City, or Yonkers tax after withholding and credits, you have to make quarterly estimated payments.10New York State Department of Taxation and Finance. Instructions for Form IT-2105 Estimated Tax Payment Voucher for Individuals The threshold is low; the underpayment penalty is what matters at high incomes.
To avoid the penalty, pay at least 90% of your 2026 liability through withholding and estimates during the year, or use the prior-year safe harbor. There’s a catch for high earners: if your New York adjusted gross income on the prior year’s return exceeded $150,000 ($75,000 if married filing separately), the safe harbor requires 110% of the prior year’s tax, not 100%.10New York State Department of Taxation and Finance. Instructions for Form IT-2105 Estimated Tax Payment Voucher for Individuals
That 110% figure matters most when income swings. If you had a large capital gain or bonus in 2025 and 2026 income drops, you still need 110% of your 2025 liability to lock in penalty protection, which can mean significantly overpaying. If 2026 income jumps unexpectedly, the 90% current-year test becomes the binding constraint instead. Getting the calculation wrong on a seven-figure tax bill produces a five-figure penalty.
How Long These Rates Last
The 9.65%, 10.30%, and 10.90% brackets were originally enacted as temporary measures and have been extended several times. The most recent extension, in the FY 2026 state budget, pushed the expiration from the end of 2027 to the end of 2032.11New York State Assembly. FY 2026 New York State Executive Budget Revenue Article VII Legislation Memorandum in Support Unless the legislature acts again, these rates revert to lower levels after the 2032 tax year.
The same legislation also cut rates slightly for lower and middle brackets, dropping the bottom rate from 4% to 3.9% and trimming several intermediate brackets below the high-income thresholds.1New York State Senate. New York Code TAX 601 – Imposition of Tax Each time the surcharge has approached expiration, the legislature has extended it. For long-term planning, treating the high-earner rates as effectively permanent is more realistic than banking on a sunset that has already slipped twice.