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New York Retirement Tax Friendliness

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Overview of New York Retirement Tax Friendliness

In New York, all Social Security retirement benefits are exempt from taxation. Income from retirement accounts or a private pension is deductible up to $20,000. Sales and property taxes are both relatively high in New York.

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Annual Social Security Income
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Annual Income from Public Pension
You will pay of New York state taxes on your pre-tax income of
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Quick Guide to Retirement Income Taxes
is toward retirees.
Social Security income is taxed.
Withdrawals from retirement accounts are taxed.
Wages are taxed at normal rates, and your marginal state tax rate is %.
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    Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program. more
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New York Retirement Taxes

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New York is the fourth-largest state in the U.S. with a population of nearly 20 million. Roughly half of that population lives in the greater New York City metropolitan area. Whether you plan on retiring in the city or somewhere further upstate - in the Adirondack Mountains, for example - it’s a good idea to be familiar with the Empire State’s retirement taxes.

When it comes to income taxes, New York State is very tax-friendly for retirees. All Social Security retirement benefits are exempt from taxation. Income from retirement accounts or a private pension is deductible up to $20,000.

There are several other types of taxes in New York that are not so favorable to retirees. The state’s sales taxes and property taxes both rank among the highest in the country. New York also has its own estate tax.

A financial advisor in New York can help you plan for retirement and other financial goals. Financial advisors can also help with investing and financial planning - including taxes, homeownership, insurance and estate planning - to make sure you are preparing for the future.

Is New York tax-friendly for retirees?

New York is moderately tax-friendly for retirees. It does not tax Social Security benefits and provides seniors a sizable deduction of $20,000 on other types of retirement income. Retirees in New York should have relatively low income tax bills.

On the other hand, the state’s average state and local sales tax rate is about 8.5% and property taxes are likewise fairly steep. The average effective property tax rate in New York State is 1.69%.

Is Social Security taxable in New York?

Social Security retirement benefits are not taxable under the New York state income tax, even if they are taxable at the federal level.

Are other forms of retirement income taxable in New York?

Yes, but they are deductible up to $20,000. Income from an IRA, 401(k) or company pension is all taxable. Seniors age 59.5 and older are eligible for the $20,000 deduction. This applies to the total of all retirement income. Any retirement income that exceeds the $20,000 deduction will be taxed according to the rates show in the table below.

State Income Tax Brackets

Single Filers
New York Taxable IncomeRate
$0 - $8,5004.00%
$8,500 - $11,7004.50%
$11,700 - $13,9005.25%
$13,900 - $21,4005.90%
$21,400 - $80,6506.09%
$80,650 - $215,4006.41%
$215,400 - $1,077,5506.85%
Married, Filing Jointly
New York Taxable IncomeRate
$0 - $17,1504.00%
$17,150 - $23,6004.50%
$23,600 - $27,9005.25%
$27,900 - $43,0005.90%
$43,000 - $161,5506.09%
$161,550 - $323,2006.41%
$323,200 - $2,155,3506.85%
Married, Filing Separately
New York Taxable IncomeRate
$0 - $8,5004.00%
$8,500 - $11,7004.50%
$11,700 - $13,9005.25%
$13,900 - $21,4005.90%
$21,400 - $80,6506.09%
$80,650 - $215,4006.41%
$215,400 - $1,077,5506.85%
Head of Household
New York Taxable IncomeRate
$0 - $12,8004.00%
$12,800 - $17,6504.50%
$17,650 - $20,9005.25%
$20,900 - $32,2005.90%
$32,200 - $107,6506.09%
$107,650 - $269,3006.41%
$269,300 - $1,616,4506.85%

One exception to this is public pension income. Pension income that is paid by the New York State government, a local New York government or the federal government is exempt from all state income taxes.

How high are property taxes in New York?

New York's overall average effective rate is 1.69%, which implies $1,690 in annual property taxes for every $100,000 in home value. Rates in New York City are far lower than that, averaging 0.88% across the city’s five boroughs.

High home values mean property tax bills can still be quite high, though. For example, the median annual property tax paid by homeowners in Manhattan is more than $8,900.

What is the New York STAR exemption?

There are two STAR property tax exemptions in New York: the basic exemption and the enhanced exemption. The basic exemption has no age restriction. It is available to any homeowner with household income of $250,000 or less. It exempts the first $30,000 in home value from school taxes.

The enhanced exemption is available only to senior citizens who are at least 65 years old and have an income of $90,550 or less. The first $69,800 in home value is exempt from school taxes.

How high are sales taxes in New York?

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The average sales tax rate in New York, including the statewide rate of 4% and averaging all city and county rates, is 8.52%. That is the 10th-highest rate in the U.S. At that rate, someone who spends $10,000 a year on taxable goods would be spending about $850 in sales taxes.

Not all products are subject to sales tax in New York. Groceries are usually exempt, as are clothing items costing less than $110. Both prescription and over-the-counter medicines are also exempt from sales tax in New York.

What other New York taxes should I be concerned about?

New York State has its own estate tax, which is collected in addition to the federal estate tax. The exemption for tax year 2020 is $5.85 million, while the 2021 exemption is $5.93 million. Estate tax rates for amounts above that exemption range from 3.06% to 16%.

Retirees who plan on supplementing their retirement income with investment income (from investments that are not held in a retirement account) may also have to pay capital gains taxes. Capital gains are considered regular income in New York and taxed at the state’s income tax rates (shown in the table above).