New York Cuts Its Five Lowest Income Tax Rates for 2026
The first stage of a two-year tax cut lowers five rates while keeping the same income thresholds and four highest rates.
New York begins 2026 with a 0.10 percentage-point reduction in each of its five lowest individual income tax rates. The lowest rate falls from 4.00% to 3.90%, while the top rate remains 10.90%. The change is the first stage of a two-year reduction enacted in the state's fiscal year 2026 budget.
Governor Kathy Hochul highlighted the start of the tax cut in a January 1 announcement, describing relief for more than 8.3 million New Yorkers. The New York State Department of Taxation and Finance (DTF) has also revised its withholding guidance so employers can apply the lower rates to paychecks issued this year.
Five Rates Fall, but the Bracket Thresholds Stay the Same
The table below compares all nine rates and the taxable income covered by each bracket for single filers. The five reduced rates are highlighted. New York does not automatically adjust its income tax brackets for inflation. The income thresholds remain unchanged for 2026. Each rate applies to the portion of taxable income within that bracket.
| Tax Bracket | 2025 | 2026 |
|---|---|---|
| Up to $8,500 | 4.00% | 3.90% |
| Over $8,500 to $11,700 | 4.50% | 4.40% |
| Over $11,700 to $13,900 | 5.25% | 5.15% |
| Over $13,900 to $80,650 | 5.50% | 5.40% |
| Over $80,650 to $215,400 | 6.00% | 5.90% |
| Over $215,400 to $1,077,550 | 6.85% | 6.85% |
| Over $1,077,550 to $5,000,000 | 9.65% | 9.65% |
| Over $5,000,000 to $25,000,000 | 10.30% | 10.30% |
| Over $25,000,000 | 10.90% | 10.90% |
New York still has nine brackets. The four higher rates remain 6.85%, 9.65%, 10.30%, and 10.90%. Other filing statuses use the same rates with different income thresholds. For married couples filing jointly, the five reduced rates cover taxable income through $323,200.
How Much Do the Lower Rates Save?
The following examples compare state income tax for single filers at the same taxable income in both years. They assume New York adjusted gross income of $88,000 or $168,000, an $8,000 standard deduction, and no dependents or tax credits. The calculations include the state's supplemental tax where required and exclude New York City and Yonkers taxes. Dollar amounts are rounded independently, with savings calculated before rounding.
| Taxable Income | 2025 | 2026 | Savings | Savings % |
|---|---|---|---|---|
| $80,000 | $4,236 | $4,155 | $80 | 1.9% |
| $160,000 | $9,600 | $9,440 | $160 | 1.7% |
At $80,000 of taxable income, the rate changes save about $80 before credits. The $160,000 example saves about $160. A 0.10 percentage-point rate cut is therefore different from a 0.10% reduction in the tax bill, as the savings percentages show.
New York's higher-income calculation needs an extra step. When New York adjusted gross income exceeds $107,650, a supplemental tax can take back some or all of the benefit of the lower brackets. The $160,000 example includes that calculation. Simply adding the tax from each bracket would understate its state tax in both years.
These are comparisons using the statutory rate schedules, not gross-salary examples or a substitute for the annual return's tax tables and worksheets. Actual savings depend on income, deductions, credits, and the applicable supplemental calculation.
The Lower Rates Also Apply to Paycheck Withholding
The New York State Department of Taxation and Finance says employers must use the revised 2026 withholding tables and methods for payrolls made on or after January 1. Lower state withholding allows employees to receive the benefit through their paychecks during 2026, rather than waiting to recover excess withholding when they file their return in 2027.
Withholding is a payment toward the annual income tax, so the paycheck benefit is part of the savings shown above. DTF also encourages employers to have employees review their 2026 Form IT-2104 if they used an earlier worksheet or additional-withholding chart to set their allowances or extra withholding.
Which Tax Year Uses the New Rates?
The first reduction applies to the 2026 tax year, with calendar-year returns generally filed in 2027. Under current law, the same five rates fall another 0.10 percentage points for the 2027 tax year, bringing them to 3.80%, 4.30%, 5.05%, 5.30%, and 5.80%.
Our New York income tax rates and brackets page provides the full schedules by filing status and explains the higher-income calculation. For available Form IT-201 returns and instructions, visit our New York income tax forms page and select the edition for the tax year you are filing.
References:
- Governor Hochul Kicks Off 2026 With Affordability Agenda, New Tax Relief Efforts and Increased Wages. January 1, 2026. Announcement of the middle-class tax cut taking effect. Office of Governor Kathy Hochul. Retrieved September 24, 2026.
- New York Tax Law Section 601: Imposition of Tax. Subsections (a)-(c), (d-4), and (d-5). Rate schedules for 2025-2027 and supplemental tax used in the examples. New York State Senate. Retrieved September 24, 2026.
- Fiscal Year 2026 Annual Report on New York State Tax Expenditures. Printed page 11, personal income tax history. Explains that tax bracket values are no longer indexed after 2017. New York State Department of Taxation and Finance. Retrieved September 25, 2026.
- Withholding Tax Rate Changes. Updated December 2, 2025. New York State and Yonkers withholding changes effective January 1, 2026. New York State Department of Taxation and Finance. Retrieved September 24, 2026.
- New York State Withholding Tax Tables and Methods, NYS-50-T-NYS (1/26). Page 3, Chapter 59 of the Laws of 2025, Part A, and employer guidance for 2026. New York State Department of Taxation and Finance. Retrieved September 24, 2026.
- 2025 Instructions for Form IT-2105. Standard deduction and prior-year estimated income tax calculation. New York State Department of Taxation and Finance. Retrieved September 24, 2026.