New York has some of the highest taxes in the country, especially in New York City, where businesses and their owners pay both state and city taxes. The state corporate rate is 6.5% to 7.25%, the top personal rate is 10.9% and the city adds an 8.85% corporate tax, a 4% Unincorporated Business Tax and personal income tax of up to 3.876%. New LLCs must also comply with an expensive publication requirement.
This guide covers New York's business taxes for 2026, with worked examples for state and city businesses and comparisons with its neighbors.
New York business taxes at a glance
Outside New York City, a C corporation pays 6.5% state tax on business income, and pass-through owners pay state personal income tax, with most small-business income taxed at 5.4% to 6.85%. Inside the city, taxes stack up: corporations pay 8.85% more to the city, unincorporated businesses pay the 4% UBT, and resident owners pay city income tax. Payroll costs include unemployment insurance, the MCTMT in the metropolitan area and employee-funded paid family leave and disability insurance. Customers pay 4% state sales tax plus local taxes, for 8.875% in the city. LLCs pay $200 to form, plus publication costs that can exceed $1,000 in Manhattan.
Corporate franchise tax
| Tax base | 2026 rate |
|---|---|
| Business income (most corporations) | 6.5% |
| Business income above $5 million | 7.25% |
| Qualified manufacturers | 0% |
| Business capital base | 0.1875% (capped) |
| Fixed dollar minimum | $25 to $200,000 based on New York receipts |
Corporations pay the highest of the tax on business income, the capital base or the fixed dollar minimum.
- Small business rate: Small businesses with business income below a threshold can pay a reduced rate.
- Apportionment: Single receipts factor with customer-based sourcing.
- Combined reporting: Required for unitary groups with common ownership above 50%.
- Credits: Excelsior Jobs Program, START-UP NY, life sciences credits and the film credit.
- Returns: Form CT-3 is due on the 15th day of the fourth month after year-end.
New York City business taxes
| Tax | Who pays | Rate |
|---|---|---|
| Business Corporation Tax | C corporations doing business in NYC | 8.85% (lower for small businesses) |
| General Corporation Tax | S corporations | 8.85% |
| Unincorporated Business Tax (UBT) | Partnerships, LLCs and sole proprietors | 4% (with credits for small businesses) |
| Personal income tax | NYC residents | 3.078% to 3.876% |
| Commercial rent tax | Tenants in Manhattan below 96th Street paying more than $250,000 in rent | Effective 3.9% |
The UBT offers a full credit for businesses with tax below $3,400 and a partial credit up to $5,400, which removes the tax for many small businesses.
Personal income tax and pass-through owners
| Taxable income (single, 2026) | Rate |
|---|---|
| $0 to $8,500 | 3.9% |
| $8,500 to $11,700 | 4.4% |
| $11,700 to $13,900 | 5.15% |
| $13,900 to $80,650 | 5.4% |
| $80,650 to $215,400 | 5.9% |
| $215,400 to $1,077,550 | 6.85% |
| $1,077,550 to $5,000,000 | 9.65% |
| $5,000,000 to $25,000,000 | 10.3% |
| Over $25,000,000 | 10.9% |
- LLC owners, partners and sole proprietors pay these rates on profit.
- S corporation shareholders pay on their share. New York requires a separate S corporation election (Form CT-6).
- PTET: Entity-level tax at 6.85% to 10.9%, deductible federally, with a separate NYC PTET.
- Convenience of the employer rule: Nonresidents working remotely for New York employers may owe New York tax on wages unless the remote work is required by the employer.
Sales and use tax
| Component | Rate |
|---|---|
| State sales tax | 4% |
| Local taxes | 3% to 4.875% |
| New York City combined | 8.875% |
| Average combined rate | About 8.54% |
- Clothing and footwear under $110 are exempt from the state tax, and NYC also exempts them.
- Services: New York taxes some services, including information services, building maintenance and parking.
- Remote sellers with more than $500,000 of New York sales and 100 transactions must collect.
Payroll and property taxes
- Unemployment insurance: Employers pay on a wage base above $12,000 that rises annually.
- Paid Family Leave and disability insurance: Funded mainly by employee contributions withheld by employers.
- MCTMT: Payroll tax of up to 0.6% in New York City and 0.34% in surrounding counties.
- Property tax: High across the state, particularly in suburbs and upstate cities. NYC commercial property taxes are among the highest in the country.
Forming a business in New York: fees and ongoing costs
| Item | LLC | Corporation |
|---|---|---|
| Formation filing fee | $200 | $125 plus a $10 minimum stock tax |
| Publication requirement | Six weeks in two newspapers (often $300 to $1,500+) | Not required |
| Biennial statement | $9 | $9 |
| Annual LLC filing fee | $25 to $4,500 based on New York-source gross income | Not applicable |
| Registered agent | Optional (Secretary of State accepts service) | Optional |
Worked example: $500,000 of profit
| Step | Amount |
|---|---|
| Business income | $500,000 |
| New York State tax at 6.5% | $32,500 |
| Federal tax at 21% on $467,500 | $98,175 |
| Total income tax (outside NYC) | $130,675 (26.1%) |
In New York City, the corporation would also pay about $44,250 of city tax at 8.85%, which is deductible for federal purposes, bringing the combined rate to roughly 33%. For a single LLC owner with $150,000 of New York taxable income, state tax is about $8,282. At $75,000 it is about $3,885. A New York City resident would add about $5,500 of city tax at $150,000.
How New York compares with its neighbors
| State | Corporate rate | Top personal rate | State sales tax |
|---|---|---|---|
| New York | 6.5% to 7.25% (plus NYC 8.85%) | 10.9% (plus NYC) | 4% plus local |
| New Jersey | 6.5% to 9% (11.5% above $10M) | 10.75% | 6.625% |
| Connecticut | 7.5% | 6.99% | 6.35% |
| Pennsylvania | 7.49% | 3.07% plus local | 6% |
| Massachusetts | 8% plus property measure | 9% | 6.25% |
| Vermont | 6% to 8.5% | 8.75% | 6% |
New York State's corporate rate is moderate for the region. The difference comes from New York City, whose taxes make Manhattan one of the most expensive places in the country to run a business. Many companies serving the city locate in New Jersey, Westchester or Long Island to avoid city taxes.
Choosing an entity in New York
- LLC: Pays annual filing fees and, in NYC, the UBT; owners pay state and city income tax. The publication requirement adds upfront cost.
- S corporation: Owners pay state tax, but in NYC the S corporation pays the 8.85% General Corporation Tax because the city doesn't recognize S status.
- C corporation: 6.5% state tax, 8.85% city tax in NYC and 21% federally.
Tax planning tips for New York businesses
Elect the state and city PTET. For profitable partnerships and S corporations, both elections can save federal tax. The state election must be made by March 15 each year.
Plan around the UBT credit. Small unincorporated businesses in NYC may owe no UBT because of the credit. Estimate your liability before deciding whether to incorporate.
Comply with the publication requirement. An LLC that fails to publish within 120 days loses its authority to do business in New York until it complies. Consider forming in a county where publication is cheaper if your LLC's office address allows it.
Recent changes for 2025 and 2026
- 7.25% corporate rate for income above $5 million continues through 2026.
- Personal income tax brackets adjusted for the middle class from 2025, with small rate cuts phased in.
- MCTMT rate increased for NYC employers in 2023.
- Congestion pricing began in Manhattan in 2025, affecting delivery and service businesses.
Is New York a good state for business?
Advantages
- Access to the largest metropolitan economy in the country
- Global center for finance, media and technology
- Deep talent pool and investor networks
- 0% corporate rate for qualified manufacturers
Drawbacks
- High combined state and city taxes in NYC
- Expensive LLC publication requirement
- High property and payroll costs
- Complex compliance with state and city returns
Compliance checklist
- File Articles of Organization or a Certificate of Incorporation with the Department of State.
- Publish notice of LLC formation within 120 days and file the Certificate of Publication.
- Register with the Department of Taxation and Finance for sales tax and withholding.
- Register with the Department of Labor for unemployment insurance and arrange disability and paid family leave coverage if you hire.
- File the biennial statement every two years.
- File Form CT-3, CT-3-S or IT-204, plus NYC returns if applicable.
Compare New York with its neighbors below or estimate your taxes in the United States calculator. See Corporation taxes for more.