What Is NYC City Tax? Rates, Residency, and Who Pays

The 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 effective rates running from 3.078% to 3.876% depending on income and filing status. It applies to anyone domiciled in the five boroughs and to certain long-term occupants who meet a day-count test. You don’t file a separate city return — the tax rides along on your New York State return, and the state collects it and passes the city its share.¹

Who Has to Pay NYC Income Tax

Two separate tests can pull you into the city tax. Meet either one and you owe.

Domicile

Your domicile is your permanent home, the place you intend to return to after any time away. If that place is in the five boroughs, you owe NYC income tax on all of your income no matter how many days you actually spent in the city.² Owning a home somewhere else doesn’t change that on its own. Shedding an NYC domicile requires clear and convincing evidence that you’ve genuinely abandoned it and established a new permanent home elsewhere; registering to vote out of state or filing a certificate of domicile is not enough by itself.³

Statutory Residency

Even if you’re domiciled elsewhere, the city will treat you as a resident for tax purposes if you maintain a permanent place of abode in the city for substantially the entire year and spend more than 183 days in the five boroughs.² A permanent place of abode is any dwelling suitable for year-round use that’s available to you, whether you own it, rent it, or someone else keeps it for you. The days don’t have to be consecutive, and any part of a day in the city usually counts as a full day. Active-duty military members are exempt from the statutory residency test.

If You Commute In but Live Outside the City

Commuters who live outside the five boroughs do not owe the NYC personal income tax, even if they work in Manhattan every day.³ You still owe New York State tax on your NYC-sourced wages, but the city layer doesn’t apply.

One narrow exception matters. Under Section 1127 of the New York City Charter, nonresidents who work directly for the City of New York must pay an amount equal to what the city income tax would be if they lived in the city. Courts have limited this to people who voluntarily sought the city job; employees swept into a city agency through an involuntary transfer have successfully argued they aren’t bound by Section 1127.⁴

Rates and Brackets

The tax is progressive, with a base rate set in NYC Administrative Code Section 11-1701 plus a surcharge that has been in place for more than two decades. Combined, the effective rates run from 3.078% at the bottom to 3.876% at the top.⁵

Single filers and married individuals filing separately pay the combined rates on these brackets of city taxable income:

Up to $12,000: 3.078%
$12,001 to $25,000: $369 plus 3.762% of the amount over $12,000
$25,001 to $50,000: $858 plus 3.819% of the amount over $25,000
Over $50,000: $1,813 plus 3.876% of the amount over $50,000

Married couples filing jointly, qualifying surviving spouses, and heads of household use wider brackets. For joint filers, the base rates alone start at 2.55% on the first $21,600 of city taxable income and rise to 3.4% on income above $500,000, with the surcharge layered on.⁵ The wider thresholds mean a married couple reaches each rate at a higher income level than a single filer would.

City taxable income starts from your New York State taxable income, with local adjustments. If you itemize on your state return, those itemized deductions carry through to the city calculation.

How You File and Pay

There is no separate city return. The NYC tax is built into the New York State return, and the New York State Department of Taxation and Finance collects it.¹ Full-year residents file Form IT-201. Part-year residents and nonresidents use Form IT-203 with any applicable supplemental forms.

The deadline is April 15, the same as the federal due date.⁶ If you work for an employer in the city, your NYC tax is normally withheld from each paycheck and shown in the local tax section of your W-2. When withholding covers your full liability, nothing extra is owed at filing.

Estimated Payments

If you’re self-employed, have significant investment income, or otherwise expect to owe $300 or more in NYC tax after withholding and credits, you need to make quarterly estimated payments.⁷ One payment covers both state and city tax. For the 2026 tax year, the due dates are:⁸

1st quarter: April 15, 2026
2nd quarter: June 15, 2026
3rd quarter: September 15, 2026
4th quarter: January 15, 2027

You can pay the full estimated amount with the first installment or split it across the four dates.

Credits That Reduce the Bill

Several city credits can cut what you owe, and some are refundable, meaning you get the money back even if your tax is already zero.

The NYC school tax credit has two parts. A fixed-amount credit pays up to $125 for married couples filing jointly or qualifying surviving spouses and up to $63 for other filers, as long as your income is $250,000 or less and no one claims you as a dependent on their federal return. A separate rate-reduction credit, also refundable, is available if your city taxable income is $500,000 or less, calculated as a percentage of that income.⁹

If you qualify for the federal Earned Income Tax Credit, the NYC version is worth 10% to 30% of your federal credit, with lower-income filers getting the higher percentage.⁹ It stacks on top of the separate New York State earned income credit.

NYC also offers a child and dependent care credit for residents who paid childcare expenses for at least one child under age four. Your federal adjusted gross income has to be $30,000 or less, and you must also qualify for the state version. This credit stacks on top of both the federal and state child care credits.

If You Moved Into or Out of the City

Part-year residents owe city tax only on the income attributable to the period they lived in the five boroughs. You handle the split on Form IT-360.1 (Change of City Resident Status), filed with your state return.¹⁰ The form allocates income, deductions, and credits by the dates of the move. Get the dates and allocation right; mistakes here invite penalties and interest.

Penalties If You File or Pay Late

Late filing and late payment carry separate penalties. The late-filing penalty is 5% of the unpaid tax for each month or partial month the return is overdue, capped at 25%. If the return is more than 60 days late, the minimum penalty is the lesser of $100 or the total tax due.¹¹

The late-payment penalty is lighter, 0.5% of the unpaid tax per month, also capped at 25%.¹¹ On top of either penalty, interest runs on any unpaid balance. For the first quarter of 2026, the underpayment interest rate on personal income tax is 9.5% annually, and the rate is reset each quarter.¹² If you can’t pay the full amount, still file on time; that alone avoids the much steeper late-filing penalty.

Residency Audits

Residency is one of the most frequently audited issues in NYC personal income tax, especially for people who claim to have moved out of the city or who sit near the 183-day line. The standard of proof is clear and convincing evidence, and the burden is on you to show where you were on a given day.¹³

Auditors ask for the records that place you in a specific location on a specific date: personal diaries and calendars, credit card and bank statements, phone logs, utility bills, travel itineraries, EZ-Pass and building swipe records, and moving bills showing your belongings went with you.¹³ If your day count is close or you’ve recently changed your domicile, a contemporaneous daily log backed by receipts is the single best protection you can build.

Extra Local Taxes If You’re Self-Employed

Self-employed residents can face two local taxes that salaried workers don’t.

The Metropolitan Commuter Transportation Mobility Tax (MCTMT) applies to self-employed individuals with net earnings from work performed within the Metropolitan Commuter Transportation District, which covers the five boroughs and several surrounding counties. For tax years beginning in 2026, the rates are 0.60% in Zone 1 (the city and nearby areas) and 0.34% in Zone 2, each kicking in only when net earnings in that zone exceed $150,000.¹⁴ The $150,000 threshold is figured per zone on an individual basis, even for joint filers.

The NYC Unincorporated Business Tax (UBT) is a 4% tax on the taxable income of sole proprietors, partnerships, and other unincorporated businesses operating in the city. A built-in credit wipes out the tax entirely when the UBT liability is $3,400 or less, and a partial credit phases out between $3,401 and $5,400. Employees are not subject to the UBT, and neither are people who only hold and manage real property or investment assets for their own account.¹⁵

1
Office of the New York City Comptroller. The NYC Personal Income Tax Before and After the Pandemic
2
Justia. New York City Administrative Code 11-1705 – General Provisions and Definitions
3
Department of Taxation and Finance. Frequently Asked Questions About Filing Requirements, Residency, and Telecommuting for New York State Personal Income Tax
4
Cornell Law School. Ganley v. Giuliani, Hill v. City of New York
5
NYC Administrative Code. Title 11 – Taxation and Finance, Subchapter 1 – General
6
Internal Revenue Service. When to File
7
Department of Taxation and Finance. Who Must Make Estimated Tax Payments
8
Department of Taxation and Finance. Estimated Tax Payment Due Dates
9
Department of Taxation and Finance. New York City Credits
10
Department of Taxation and Finance. 2025 Instructions for Form IT-203, Nonresident and Part-Year Resident
11
Department of Taxation and Finance. Interest and Penalties
12
Department of Taxation and Finance. Interest Rates: 1/01/2026 – 3/31/2026
13
State of New York Department of Taxation and Finance. Nonresident Audit Guidelines
14
Department of Taxation and Finance. Summary of Corporation Tax and Personal Income Tax Changes
15
NYC Department of Finance. Unincorporated Business Tax (UBT)