If you live in New York City, own property there, run a business inside the five boroughs, lease large commercial space in part of Manhattan, sell goods or hotel rooms to customers in the city, or sell a city property, you pay New York City taxes. The city layers its own personal income tax, business taxes, property tax, transfer tax, sales tax, and hotel occupancy tax on top of what you already owe New York State and the federal government. Who pays which tax depends on where you live, what you own, and what you do for a living.
City Residents Owe Income Tax on Everything They Earn
NYC personal income tax follows residency, not where the money is earned. If the city considers you a resident, your entire income is taxable here, whether you made it in Brooklyn, Boston, or Berlin.
New York State Tax Law ยง 605 sets two tests, and meeting either one makes you a city resident.1New York Codes, Rules and Regulations. 20 CRR-NY 105.20 – Resident Individual The first is domicile: the place you consider your permanent home and intend to return to. If that place is in any of the five boroughs, you’re a resident. The second is the statutory resident test. Even if your true home is elsewhere, you count as a resident if you maintain a permanent place of abode in the city for substantially the entire year and spend more than 183 days there. The Department of Finance verifies this with cell phone records, credit card statements, and school enrollment during residency audits.
Rates are graduated across four brackets. For tax year 2025, single filers pay between 3.078% on the first $12,000 of taxable income and 3.876% on income above $50,000. Married couples filing jointly reach the top 3.876% rate above $90,000; heads of household hit it above $60,000. The brackets are narrow, so most full-time city workers end up at or near the top rate.
Part-year residents who move in or out during the year split their income. For the months you lived in the city, everything is taxable. For the months you lived elsewhere, only income from NYC sources counts.2Tax.NY.gov. Instructions for Form IT-203 Nonresident and Part-Year Resident Income Tax Return Wages earned both inside and outside the state during the transition get allocated on a separate schedule.
Commuters Don’t Pay, With Two Exceptions
If you live in New Jersey, Connecticut, Westchester, Long Island, or anywhere else outside the five boroughs and commute into the city for work, you owe no NYC personal income tax on your wages.3Tax.NY.gov. Frequently Asked Questions about Filing Requirements, Residency The city does not tax nonresidents on earned income. This is different from New York State, which does tax nonresidents on income sourced to the state.
Two groups don’t get the commuter break. Under NYC Charter Section 1127, most city employees hired on or after January 4, 1973, who live outside the five boroughs must file Form NYC-1127 and pay an amount calculated as if they were full residents.4NYC Department of Finance. Personal Income Tax and Non-Resident Employees Working for the city erases the tax advantage of living outside it.
Active-duty service members domiciled elsewhere but stationed in NYC are not city residents, and their military pay is exempt. Their spouses also qualify for an exemption on income earned here if they are present solely to be with the service member. Under the Servicemembers Civil Relief Act, both can elect to use the service member’s home state, the spouse’s home state, or the permanent duty station for state and city tax purposes. Military pensions are completely exempt from NYC income tax.5Tax.NY.gov. Information for Military Personnel and Veterans
Business Owners Pay a Separate Layer
Unincorporated Business Tax
Sole proprietors, partnerships, and LLCs that haven’t elected corporate tax treatment owe a 4% Unincorporated Business Tax on business income earned within the city. NYC Administrative Code Title 11, Chapter 5 governs the UBT and applies it to any trade, profession, or business activity carried on for profit in the five boroughs.6NYC Administrative Code. Title 11, Chapter 5: Taxation
You must file a UBT return if your business’s gross income from city activities exceeds $95,000. Actual tax starts once taxable income (after deductions) passes the $35,000 exemption. The city reads “conducting business” broadly, so a freelance consultant who regularly meets clients in Manhattan or a lawyer who appears in city courts can trigger UBT liability even with a home office outside the five boroughs.
Residents who also run an unincorporated business in the city can claim a personal income tax credit for the UBT they pay. If your city taxable income is $42,000 or less, the credit covers 100% of the UBT. Between $42,000 and $142,000, it phases down to 23%, where it stays for higher earners.7Tax.NY.gov. New York City Credits That prevents the worst double-taxation outcomes for sole proprietors who both live and work in the city.
Corporate Tax
C-corporations doing business in NYC face the General Corporation Tax or the Business Corporation Tax at 8.85% of net income allocated to city activities, under Title 11, Chapter 6 of the Administrative Code.8NYC Administrative Code. Chapter 6 – City Business Taxes A corporation establishes the required connection by employing people in the city, owning or leasing property, or generating receipts from city customers. Foreign corporations headquartered in other states owe the same tax if their activity in the city is sufficient.
Even corporations that lose money owe a minimum tax tied to NYC receipts, ranging from $25 for the smallest filers up to $5,000 for corporations with more than $25 million in city receipts.9NYC Department of Finance. General Corporation Tax Rates Profitable and unprofitable years both generate a city tax bill.
Commercial Rent Tax Hits One Slice of Manhattan
If you lease commercial space in Manhattan south of 96th Street and your annual rent is $250,000 or more, you owe the Commercial Rent Tax. The nominal rate is 6% of base rent, but a mandatory 35% rent reduction brings the effective rate to 3.9%.10NYC Department of Finance. Business Commercial Rent Tax – CRT
The CRT catches tenants off guard because most cities don’t impose anything like it. A filing requirement kicks in at $200,000 in annual gross rent even if no tax is ultimately owed. Tenants with base rent between $250,000 and $300,000 get a sliding-scale credit, and small businesses with base rent under $500,000 and total income of $5 million or less can qualify for a credit that zeroes out the tax. The CRT applies only to tenants, not landlords, and only within that Manhattan zone. Businesses outside it owe nothing.
Property Owners Pay by Class
Owning real estate in NYC means paying property tax. The city sorts property into four classes with separate rates for tax year 2026, each applied to assessed value rather than market value:11NYC Department of Finance. Property Tax Rates
- Class 1 (small residential, up to 3 units): 19.843%
- Class 2 (larger residential, co-ops, condos): 12.439%
- Class 3 (utility property): 11.108%
- Class 4 (commercial and industrial): 10.848%
Those rates sound enormous because they’re applied to assessed value, which is a fraction of market value. Class 1 is assessed at 6% of market value, putting the effective tax on a home’s actual worth closer to 1.2%. Class 4 commercial property is assessed at 45% of market value, so the effective burden runs much higher.12NYC Department of Finance. Definitions of Property Assessment Terms
For cooperative apartments, the building’s corporation is the legal taxpayer, but shareholders feel the cost through monthly maintenance charges. Commercial landlords typically pass property taxes through to tenants via lease escalation clauses, so the person writing the check and the person absorbing the cost are often different. Falling behind can lead to a city lien on the property.
Owner-occupied primary residences may qualify for the School Tax Relief program, which reduces the school-tax portion of the bill. For the 2026 benefit year, Basic STAR requires household income of $500,000 or less for the credit (or $250,000 or less for the exemption). Enhanced STAR, available to homeowners 65 and older, has an income limit of $110,750, with 2024 tax return income used to determine eligibility.13Tax.NY.gov. STAR Eligibility
Sellers Pay the Transfer Tax
Whenever city real property changes hands, the seller typically owes the NYC Real Property Transfer Tax. Residential properties (one- to three-family homes, condos, and co-ops) are taxed at 1% below $500,000 and 1.425% at $500,000 or above. Commercial and other property types pay 1.425% below $500,000 and 2.625% above. The city transfer tax comes on top of New York State’s separate transfer tax, so sellers should budget for both at closing.
Shoppers and Hotel Guests Pay at the Register
Sales tax in the five boroughs totals 8.875%: 4.5% city, 4% state, and 0.375% for the Metropolitan Commuter Transportation District.14NYC Department of Finance. Business NYS Sales Tax Vendors collect; consumers bear the cost.
Clothing and footwear priced under $110 per item are exempt from both the city and state portions.14NYC Department of Finance. Business NYS Sales Tax A $95 pair of shoes carries no sales tax; a $120 pair is taxed at the full 8.875%. The threshold runs per item, not per transaction, so three $80 shirts rung up together all stay exempt.
Buy something outside the city, or online without NYC tax, and bring it into the five boroughs for use, and you technically owe use tax at the same 8.875%, minus any sales tax already paid elsewhere. Most people ignore this for small purchases, but the city can assess unpaid use tax on furniture, electronics, or vehicles during an audit.
Hotel guests pay a 5.875% city hotel room occupancy tax on top of the regular sales tax.15NYC 311. Hotel Room Occupancy Tax Combined with state and city sales taxes and per-room surcharges, the total tax load on a Manhattan hotel stay can reach roughly 14.75%. The hotel collects it; the guest pays it.
When Everything Is Due
NYC personal income tax returns run on the state calendar. For tax year 2025, the deadline is April 15, 2026. An extension gives you more time to file but not to pay, and interest runs on any balance past April 15.16Tax.NY.gov. Filing Due Dates
Property taxes run quarterly. For fiscal year 2026, payments are due July 1, October 1, January 1, and April 1, with deadlines shifting to the next business day when they land on a weekend or holiday.17NYC Department of Finance. 2026 Department of Finance Calendar Smaller residential properties may pay semi-annually. Business taxes (UBT, corporate, and commercial rent) follow quarterly estimated payment schedules similar to the federal system, with a final return due on the 15th day of the fourth month after fiscal year-end.
The city charges interest on underpayments at rates that adjust quarterly. For April through June 2026, the rate on late NYC income and business taxes is 11%, covering UBT, corporate tax, commercial rent tax, and real property transfer tax alike.18NYC Department of Finance. Interest Rates on New York City Income and Excise Taxes Late filing penalties and fraud penalties stack on top of interest, so unpaid liabilities grow quickly.