A business operating in New York State owes a layered mix of taxes that depends on how it’s organized, where it operates, and whether it sells goods or hires employees. New York State business taxes typically include a corporate franchise tax or pass-through filing for the entity itself, state sales tax on most retail sales, personal income tax that owners pay on business profits, and a cluster of employer taxes once you have staff. Businesses in New York City and the surrounding commuter district owe additional local taxes on top of the state ones.
Here is what applies to you, how much it costs, and when you have to file.
What Your Entity Type Determines
The first question is whether your business is a C corporation, an S corporation, a partnership or multi-member LLC, or a sole proprietorship or single-member LLC. Each is treated differently.
C Corporations: Franchise Tax Under Article 9-A
C corporations doing business in New York pay a franchise tax equal to the highest of three calculations: a business income base, a business capital base, or a fixed dollar minimum tied to New York receipts.1New York State Department of Taxation and Finance. Article 9-A – Franchise Tax on General Business Corporations You compute all three and pay whichever is largest.
The business income rate is 7.25% for corporations with more than $5 million in business income and 6.5% for everyone else.2New York State Department of Taxation and Finance. Definitions for Article 9-A Corporations The fixed dollar minimum scales with New York source receipts:
- $100,000 or less: $25
- $100,001 to $250,000: $75
- $250,001 to $500,000: $175
- $500,001 to $1 million: $500
- $1 million to $5 million: $1,500
- $5 million to $25 million: $3,500
- $25 million to $50 million: $5,000
- $50 million to $100 million: $10,000
- $100 million to $250 million: $20,000
- $250 million to $500 million: $50,000
- $500 million to $1 billion: $100,000
- Over $1 billion: $200,000
A corporation that loses money still owes the fixed dollar minimum. There is no scenario in which the franchise tax reaches zero.2New York State Department of Taxation and Finance. Definitions for Article 9-A Corporations
S Corporations, Partnerships, and LLCs
New York S corporations are pass-through entities for income tax. The corporation does not pay tax on business income; shareholders report their share on their personal New York returns under Article 22.3New York State Senate. New York Tax Law 660 – Election by Shareholders of S Corporations The S corporation still owes the Article 9-A fixed dollar minimum on the same receipts schedule above.
Partnerships and LLCs taxed as partnerships don’t pay entity-level income tax either. Income passes through to the partners or members.4New York State Department of Taxation and Finance. Partnerships They file Form IT-204 as an information return if they have New York-resident partners or any New York source income, and they owe an annual filing fee based on New York source gross income that ranges from $25 for entities earning $100,000 or less up to $4,500 for those exceeding $25 million.
New York City Overlays
Businesses operating in New York City face additional local taxes. C corporations owe the city’s Business Corporation Tax. S corporations are exempt from that one but remain subject to the city’s separate General Corporation Tax.5NYC.gov. Business Corporation Tax
Unincorporated businesses in the city, including sole proprietorships, partnerships, and LLCs not taxed as corporations, owe the Unincorporated Business Tax at a flat 4% on taxable income allocated to New York City. A full credit wipes out the tax if the liability is $3,400 or less, and a partial credit phases out between $3,401 and $5,400.6NYC.gov. Unincorporated Business Tax (UBT) Very small unincorporated businesses in the city pay nothing, but the threshold is low enough that most active ones owe something.
Sales and Use Tax
New York charges a 4% state sales tax on most retail sales of tangible personal property and certain services. Local jurisdictions add their own tax, so the combined rate a customer pays typically runs between 7% and 8.875% depending on the county or city.7New York State Department of Taxation and Finance. Sales Tax Rate Publications Clothing and footwear priced below $110 per item are exempt from the state’s 4%, though some localities still tax them.8New York State Department of Taxation and Finance. Clothing and Footwear Exemption
Who Has to Collect
Any business with a physical presence in New York, such as an office, warehouse, or employees working in the state, must register as a vendor. Businesses with no physical presence still have nexus if they exceed $500,000 in cumulative sales of tangible personal property delivered into New York and make more than 100 such sales during the preceding four sales tax quarters. Both thresholds must be met.9New York State Department of Taxation and Finance. Registration Requirement for Businesses With No Physical Presence in New York State
Several services are taxable too, including information services, security and protective services, and maintenance or repair of property. You also owe use tax on items you buy for your own operations from out-of-state sellers who didn’t collect New York tax. Buy a $10,000 piece of equipment online with no tax charged, and you owe the equivalent sales and use tax directly to the state.10New York State Department of Taxation and Finance. Use Tax for Businesses
If you sell through an online marketplace like Amazon or Etsy, the marketplace is generally responsible for collecting and remitting sales tax on tangible goods it facilitates. You’re relieved of the collection obligation on those sales if the marketplace gives you a completed Form ST-150 or publishes a policy stating it collects the tax. You still have to collect tax on direct sales outside the marketplace and on taxable services the marketplace doesn’t cover.11New York State Department of Taxation and Finance. Sales Tax Requirements for Marketplace Providers
Buying for Resale
If you buy inventory to resell, you can avoid paying sales tax on those purchases by giving the seller Form ST-120, the New York Resale Certificate. It covers tangible personal property you intend to resell and taxable services you resell to your customers.12New York State Department of Taxation and Finance. Resale Certificate (ST-120) If you’re the seller accepting certificates, keep them on file for at least three years after the due date of the return. Accept one in good faith and the liability generally shifts to the buyer if they misuse the exemption. Never collect one at all and the transaction is treated as a taxable retail sale.
Employer Taxes
Hiring in New York triggers several obligations beyond withholding state income tax from paychecks.
Unemployment Insurance
Employers contribute to the state unemployment insurance fund. For 2026, new employers pay a combined rate of 4.1%, which includes the normal contribution rate of 3.4% plus subsidiary charges.13New York State Department of Labor. Unemployment Insurance Rate Information After a few years, your rate adjusts based on your experience rating, so businesses with fewer layoffs pay less over time.
Metropolitan Commuter Transportation Mobility Tax
The MCTMT hits employers with more than $312,500 in total quarterly payroll for employees working within the Metropolitan Commuter Transportation District: New York City plus Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester counties.14New York State Department of Taxation and Finance. Employers – Metropolitan Commuter Transportation Mobility Tax (MCTMT)
Rates depend on zone and payroll size. For quarters beginning on or after July 1, 2025, Zone 1 (the five boroughs) rates range from 0.055% on payroll up to $375,000 to 0.895% on payroll above $2.5 million. Zone 2 (the surrounding counties) rates run from 0.055% up to 0.635%.15New York State Department of Taxation and Finance. Metropolitan Commuter Transportation Mobility Tax (MCTMT) Rates jumped meaningfully in mid-2025, so budgets based on older figures need recalculating.
Disability Benefits and Paid Family Leave
Nearly every New York employer must carry disability benefits coverage and Paid Family Leave coverage once they’ve had at least one employee for 30 or more days in a calendar year. Coverage comes through a private insurance carrier, the state fund, or self-insurance with state approval.
Disability benefits provide employees up to 50% of their average weekly wage, capped at $170 per week, for up to 26 weeks when they can’t work due to a non-work-related illness or injury. Paid Family Leave provides up to 67% of the statewide average weekly wage for up to 12 weeks for bonding with a new child, caring for a seriously ill family member, or assisting with a military deployment. Employees fund PFL through payroll deductions, but the employer is responsible for having the coverage in place. Skip it and you face penalties and personal liability for benefit payments.
The PTET Election: An Optional Workaround Worth Checking
New York offers an optional pass-through entity tax that partnerships and S corporations can elect into each year. The PTET is designed to work around the federal $10,000 cap on state and local tax deductions. The entity pays tax at the entity level, and each partner or shareholder claims a credit for their share on their personal return.16New York State. Pass-Through Entity Tax (PTET)
The election must be made by March 15 of the tax year, and only an owner or officer can submit it. Tax professionals cannot make the election on a client’s behalf. Single-member LLCs, sole proprietorships, and publicly traded partnerships are not eligible.
Rates are graduated based on the entity’s taxable income:
- $2 million or less: 6.85%
- $2 million to $5 million: $137,000 plus 9.65% of income over $2 million
- $5 million to $25 million: $426,500 plus 10.30% of income over $5 million
- Over $25 million: $2,486,500 plus 10.90% of income over $25 million
Whether the PTET actually saves money depends on the owners’ individual tax situations, and claiming the credit adds an income modification on the personal return. For most multi-member businesses with owners who itemize, it’s worth running the numbers every year.17New York State Department of Taxation and Finance. TSB-M-21(1)C, (1)I – Pass-Through Entity Tax
Key Filing Deadlines
Corporate Franchise Tax
Calendar-year C corporations file Form CT-3 by April 15. Fiscal-year filers have three and a half months after the end of their reporting period. You can get a six-month extension by filing Form CT-5 and paying your estimated tax by the original due date.18New York State Department of Taxation and Finance. Instructions for Form CT-3 General Business Corporation Franchise Tax Return
C corporations expecting to owe $5,000 or more in franchise tax after credits must make quarterly estimated payments. For non-Article 9-A corporations, the threshold is $1,000. S corporations taxed under Article 9-A are not required to make estimated payments.19New York State Department of Taxation and Finance. Estimated Tax Requirements for Corporations
Sales Tax
New York’s sales tax quarters do not follow the calendar. The four periods run March 1 through May 31, June 1 through August 31, September 1 through November 30, and December 1 through the end of February. Quarterly returns are due within 20 days after each period ends.20New York State Department of Taxation and Finance. Filing Requirements for Sales and Use Tax Returns High-volume vendors may be required to file monthly, low-volume ones annually.
PTET
The election deadline is March 15 of the tax year, with estimated payments due during the year. Miss March 15 and you cannot participate for that year. No extension is available for the election itself.16New York State. Pass-Through Entity Tax (PTET)
Penalties for Missing Deadlines
New York treats late filing and late payment as separate offenses, and the sales tax penalty is harsher than the income tax penalty. Many owners conflate the two and end up surprised by the bill.
For income and franchise taxes, filing late triggers a penalty of 5% of the tax due for each month (or partial month) the return is overdue, capped at 25%. Paying late without filing late is a smaller 0.5% per month on the unpaid amount, also capped at 25%. Interest accrues on top of both penalties, compounded daily at a rate the Department adjusts quarterly.21New York State Department of Taxation and Finance. Interest and Penalties
Sales tax penalties are steeper: 10% of the tax due for the first month plus 1% for each additional month, up to 30%.22New York Codes, Rules and Regulations. 20 CRR-NY 536.1 – Penalties and Interest The state takes sales tax compliance especially seriously because those are funds you collected from customers on its behalf.
Registering Your Business for Tax
Registration runs primarily through the state’s online portal. Create a Business Online Services account at the Department of Taxation and Finance website; it becomes your hub for filing returns, making payments, and responding to notices.23New York State Department of Taxation and Finance. Online Services for Businesses Only an owner or officer can set up the account as the Business Master Administrator.24New York State Department of Taxation and Finance. Create Account
Before you start, gather your federal Employer Identification Number, the exact legal name as filed with the Department of State, the physical address where business activity occurs, and the names, Social Security numbers, and addresses of all responsible persons such as officers and partners.
If you’ll make taxable sales, you need a Certificate of Authority before conducting any transactions. Apply using Form DTF-17 at least 20 days before your first taxable sale or service.25New York State Department of Taxation and Finance. Instructions for Form DTF-17 Application to Register for a Sales Tax Certificate of Authority
The LLC Publication Trap
This one catches new LLC owners off guard. Under Section 206 of the Limited Liability Company Law, every newly formed New York LLC must publish a notice of its formation in two newspapers within 120 days of its effective date. The county clerk where the LLC’s office is located designates which newspapers you must use.26New York Department of State. Certificate of Publication for Domestic Limited Liability Company
After publication, you file a Certificate of Publication with the Department of State along with the newspaper affidavits, which costs a $50 filing fee. The real cost is the newspaper advertising itself, which varies by county. Manhattan or the Bronx can run $800 to $1,500 or more. Upstate counties like Albany or Monroe might cost $100 to $375.
Skip this step and the LLC’s authority to conduct business in New York is suspended. The entity continues to exist, but it cannot legally transact business until the Certificate of Publication is filed and the suspension is annulled.
If You’re Already Behind: Voluntary Disclosure
Businesses that have failed to file returns or underpaid taxes, but have not yet been contacted by the Department, can apply to the Voluntary Disclosure and Compliance Program. Accepted participants pay the taxes they owe but avoid monetary penalties and potential criminal charges. You must disclose what’s owed, pay it, and agree to comply going forward.27New York State. Voluntary Disclosure and Compliance Program The option disappears the moment an auditor contacts you, so if you know you have a gap, act before the Department finds it first.