State-by-State Guide to Taxes on Retirees - New_York
Tool | November 2019

State-by-State Guide to Taxes on Retirees

New York

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The Bottom Line
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The Empire State’s heavy tax burden carries over into retirement—especially when it comes to property taxes. There are some property tax breaks for seniors, though. Local governments and public-school districts can reduce the assessed value of their home by 50%. To qualify, the homeowner must be 65 or older and meet certain income limitations and other requirements. An Enhanced STAR exemption is also available for the primary residences of senior citizens (age 65 and older) with annual household incomes of $86,300 or less for 2019. Under the program, the first $66,800 (for 2019 to 2020 school tax bills) of home value is exempt from school property taxes.

When it comes to income taxes, New York’s tax bite is less severe for retirees when compared to other states. Social Security benefits, federal and New York government pensions, and military retirement pay are exempt. However, anything over $20,000 from a private retirement plan (including pensions, IRAs and 401(k) plans) or out-of-state government plan is taxed.

State Sales Tax

4% state levy. Localities can add as much as 4.88%, and the average combined rate is 8.49%, according to the Tax Foundation. In the New York City metro area, there is an additional 0.375% sales tax to support transit. Clothing and footwear that cost less than $110 (per item or pair) are exempt from sales tax.

Income Tax Range

Low: 4.0% (on up to $8,500 of taxable income for single filers and up to $17,150 for married couples filing jointly)

High: 8.82% (on taxable income over $1,070,550 for single filers and over $2,155,350 for married couples filing jointly).

Effective tax rate: 5.03% for single filers, 6.33% for joint filers.

New York allows localities to impose an income tax; the average levy is 2.11%, per the Tax Foundation.

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

Income from federal government, New York state and local government, and miltary retirement plans is exempt.

In addition, taxpayers age 59 1/2 and older can exclude up to $20,000 of federally-taxed income from private retirement plans or government plans from another state.

Railroad Retirement benefits are fully exempt.

Property Taxes

In New York, residents pay $1,812 in taxes per $100,000 of assessed home value.

Tax breaks for seniors: New York State law gives local governments and public-school districts the option of granting a reduction on the amount of property taxes paid by qualifying senior citizens by reducing the assessed value of residential property owned by seniors by 50%. To qualify, seniors must be 65 or older and meet certain income limitations and other requirements. For the 50% exemption, the law allows each county, city, town, village or school district to set the maximum income limit between $3,000 and $29,000. Under the so-called sliding-scale option, localities may also grant an exemption of less than 50% to senior citizens with yearly incomes between $29,000 and $37,399.99. New York City allows income to reach $58,399 for age-qualifying seniors. There is also an Enhanced STAR program for seniors. The Enhanced STAR exemption is available for the primary residences of senior citizens (age 65 and older) with annual household incomes not exceeding the statewide standard. Combined income must be $86,300 or less for 2019. For qualifying senior citizens, the Enhanced STAR program exempts the first $66,800 (for 2019 to 2020 school tax bills) of the full value of their home from school property taxes.

Vehicle Taxes

Sales tax is due on purchases. Some counties also charge a tax based on the weight of the vehicle.

Inheritance and Estate Taxes

Estates exceeding $5.74 million are subject to estate tax, with a top rate of 16%.

The state estate tax is a “cliff tax.” That means if the value of the estate is more than 105% of the current exemption, the exemption won’t be available and the entire estate will be subject to state estate tax.

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