What Is NYC City Tax? Rates, Credits, and Who Must File

NYC city tax is a personal income tax that New York City charges its residents on top of federal and New York State income tax, with rates running from 3.078% to 3.876% depending on taxable income and filing status. It’s filed as part of your New York State return rather than on a separate city form, and for most employees it’s already being withheld from each paycheck. The money funds city schools, emergency services, transit, and other municipal operations.¹

Who Has to Pay

You owe the city income tax if you’re a New York City resident. There are two ways to be one.

The first is domicile. If your permanent home is inside the five boroughs and that’s the place you intend to return to whenever you’re away, you’re a resident, regardless of how much time you actually spend there in a given year.

The second is the statutory resident rule. Even if your domicile is somewhere else, you’re treated as a city resident if you maintain a permanent place of abode in NYC and spend 184 days or more there during the tax year. Any part of a day counts as a full day.²

If you moved into or out of the city during the year, you’re a part-year resident and owe city tax only on income earned while you were living there.

One point that catches people off guard: if you live outside the city but commute in for work, you do not owe NYC personal income tax. Non-residents pay New York State tax on their New York-source income, but the city’s tax applies only to residents.² A narrow exception for certain city government employees is covered below.

The Rates

The city uses a progressive structure with four brackets. These rates have been unchanged since 2017.¹

Single or married filing separately:

3.078% on taxable income up to $12,000
3.762% on income from $12,001 to $25,000
3.819% on income from $25,001 to $50,000
3.876% on income over $50,000

Married filing jointly or qualifying surviving spouse:

3.078% on taxable income up to $21,600
3.762% on income from $21,601 to $45,000
3.819% on income from $45,001 to $90,000
3.876% on income over $90,000

Head of household:

3.078% on taxable income up to $14,400
3.762% on income from $14,401 to $30,000
3.819% on income from $30,001 to $60,000
3.876% on income over $60,000

These are marginal rates. Each rate applies only to the income inside its bracket. A single filer with $60,000 of NYC taxable income pays 3.078% on the first $12,000, 3.762% on the next $13,000, 3.819% on the next $25,000, and 3.876% only on the final $10,000. The effective rate works out to about 3.7%.¹

Credits That Lower What You Owe

Several credits are specific to the city and sit separately from federal and state ones.

NYC School Tax Credit

A fixed-dollar credit for full-year residents who can’t be claimed as a dependent on someone else’s return. Eligibility caps out at $250,000 of income. You claim it on the NYC credits section of Form IT-201.³

NYC Earned Income Credit

If you qualified for the federal earned income tax credit, you automatically qualify for the state and city versions. The city credit is between 10% and 30% of your federal EITC, with the exact percentage set by your New York adjusted gross income, and it’s refundable, so any amount above your city tax liability comes back to you as a payment.³ Eligible New Yorkers receive an average of $2,300 across the federal, state, and city credits combined.⁴

NYC Child Care Tax Credit

A targeted credit for households with income of $30,000 or less and children under 4. Don’t mistake it for the New York State Child and Dependent Care Credit, which covers children under 13 and has no hard income cutoff. The city credit is the narrower program.⁵

How and When You File

City tax travels with your state return. Full-year residents use Form IT-201 to report state and city tax together.⁶ If you moved into or out of the city during the year, use Form IT-203 for nonresidents and part-year residents instead.⁷

The city uses the same standard deductions as New York State. For the 2025 tax year (returns filed in 2026), those are $8,000 for single filers, $16,050 for married filing jointly, $11,200 for head of household, and $8,000 for married filing separately.⁸

New York State requires e-filing if you’re using tax software that supports it and you have broadband. If you’re filling out paper forms from the state website or a library, you can still mail them.⁹

Estimated Payments for Income Without Withholding

If you have income that isn’t being withheld on, such as freelance pay, investment returns, or rental profits, you probably need to make quarterly estimated payments covering city, state, and federal obligations. New York handles the state and city portions through a single process using Form IT-2105. For the 2026 tax year, the due dates are:

First payment: April 15, 2026
Second payment: June 15, 2026
Third payment: September 15, 2026
Fourth payment: January 15, 2027

Underpayment triggers a penalty, so your quarterly payments should land reasonably close to your actual liability.¹⁰

If You’re Self-Employed: The Unincorporated Business Tax

Self-employed city residents and anyone running an unincorporated business in NYC (sole proprietorship, partnership, or LLC taxed as one) face a second levy on top of personal income tax. The Unincorporated Business Tax, or UBT, is a flat 4% on net income allocated to New York City.¹¹

A built-in credit absorbs the tax for smaller operations. If your UBT comes to $3,400 or less, the credit wipes it out entirely. Between $3,400 and $5,400, the credit phases out. Above $5,400 of UBT, there’s no credit left.¹² Practically, a sole proprietor with roughly $85,000 or less of NYC net business income owes nothing in UBT. If you expect your UBT to exceed $3,400 for the year, you file an estimated declaration on Form NYC-5UBTI.¹³

Section 1127 for Non-Resident City Employees

A rule that surprises many city workers: if you work for the New York City government, were hired on or after January 4, 1973, and live outside the five boroughs, you have to make a payment roughly equal to what you’d owe if you were a city resident. It isn’t technically a tax; it’s a condition of employment under Section 1127 of the City Charter.¹⁴

The calculation uses the same brackets as the regular city income tax. You compute what your city tax would be as a resident, subtract any actual city tax you already paid (for example, as a part-year resident), and remit the difference. The form is NYC-1127, due May 15 of the following year. If you received a federal or state filing extension, the 1127 is due within 15 days of that extended deadline.¹⁴

Penalties for Filing or Paying Late

Late filing and late payment carry separate penalties, and they stack.

The late filing penalty is 5% of the tax due for each month or partial month the return is overdue, capped at 25%. A return more than 60 days late carries a minimum penalty of $100 or the total tax due, whichever is less.¹⁵

The late payment penalty is 0.5% of the unpaid amount per month, also capped at 25%. Interest runs separately on the unpaid balance from the original due date until payment, at a rate set by the Commissioner of Taxation and Finance.¹⁵¹⁶

If you can’t pay the full balance, file on time anyway and pay what you can. The late filing penalty is ten times the monthly rate of the late payment penalty, so getting the return in by the deadline is the priority even when the money isn’t there.

1
Office of the New York City Comptroller. The NYC Personal Income Tax Before and After the Pandemic
2
Department of Taxation and Finance. Frequently Asked Questions About Filing Requirements, Residency, and Telecommuting for New York State Personal Income Tax
3
Department of Taxation and Finance. New York City Credits
4
ACCESS NYC. Earned Income Tax Credit (EITC)
5
NYC Department of Consumer and Worker Protection. FAQ – Tax Credits
6
Department of Taxation and Finance. IT-201 Resident Income Tax Return Information
7
Department of Taxation and Finance. Instructions for Form IT-201 Full-Year Resident Income Tax Return
8
Department of Taxation and Finance. 2025 Standard Deductions
9
Tax.NY.gov. E-file Requirement for Individual Taxpayers
10
Tax.NY.gov. Estimated Tax Payment Due Dates
11
NYC.gov. Business Unincorporated Business Tax UBT
12
NYC.gov. Partnership Declaration of Estimated Unincorporated Business Tax – Estimated Tax Worksheet
13
NYC.gov. NYC-5UBTI 2026 – Declaration of Estimated Unincorporated Business Tax
14
NYC.gov. NYC-1127 Return for Nonresident Employees of the City of New York Hired on or After January 4, 1973
15
Department of Taxation and Finance. Interest and Penalties
16
Legal Information Institute. NY Comp Codes R and Regs Tit 20 157.7 – Interest and Additions to Tax