Important Tax Facts:
-The State of New York has both Corporate income tax and personal income tax with maximum rates of 6.50% and 8.82%, respectively. New York is also one of the few states that also has an estate tax. Read more below.
The state of New York does have an individual income tax. Like most states with income tax, it is calculated on a marginal scale, with eight (8) tax brackets. They range from 4.00% to 8.82%. The highest bracket of 8.82% starts for income greater than $1,077,550.
Local income tax* – depending on the jurisdiction you live or work in, you may be subject to an additional Local Income tax. The average local income tax rate is 1.49% of your adjusted gross income (2nd highest in the country, behind Ohio). The four (4) jurisdiction that have additional local tax are:
The state of New York does have a business income tax (commonly referred to as a Franchise Tax), however it its calculation is not straight forward. There are three (3) tax bases in New York*** – Business Income tax, Business Capital Tax, and Fixed Dollar Minimum Tax. New York Corporations must calculate all three and pay the highest one. Below are the three (3) tax bases:
Business Income Tax – New York’s state tax is a flat tax of 6.50% on all net income. However, if you have a Qualified Emerging Tech Company (QETC) or a Qualified NY Manufacturer, your tax rate may be lower.
Business Capital Tax – In addition to a business tax on C Corporations, there is also a Capital Stock Tax called the Business Capital tax. The tax is 0.05% on Capital Assets less than liabilities attributed to assets. QETC and Manufacturers have a tax rate of 0.038%.
Fixed Dollar Minimum (FDM) Tax – the FDM tax is a Gross Margins Tax. It based on which FDM tax bracket your Gross Receipts falls under. The tax is between $25 to $200,000. QETCs and Manufacturers have smaller tax rates.
C Corporations and S Corporations and subject to the NY Franchise Tax. However, other flow-thru entities, such as LLCs, LLPs, or partnerships in NY are not required to pay a Franchise Tax, however they are subject to a State Filing Fee (like California’s LLC Fee). It is based on the Gross Receipts of the entity.
Like many states, New York has multiple sales tax rates. One at the state level and another at the local level. The state rate is 4.00% the average local rate is 4.52% (total average rate for New York Sales Tax is 8.52%).
The average property tax rate for residential property in the state of New York is 1.40%, which is a high property tax as far as a percent of a taxpayer’s main home.
The state of New York has an estate tax that ranges between 3.06% and 16.00%. The first $5,870,000 dollars of the estate is exempt from tax.
Payroll (Unemployment Insurance) taxes are paid by business on the behalf of their employees to fund unemployment insurance to the state. It consists of multiple factors. Below is an outline of the most common ones in New York –
New York has an inexpensive cost of opening an LLC. Here are some important facts: