Personal Income Tax
If you live in New York City and earn income, you are charged personal income tax. The tax is administered and collected by the New York State Department of Taxation and Finance and is a minimum 3.876%.Business Corporation Tax (BCT)
A corporation is subject to the BCT based on whether it is “doing business” (i.e., doing business, employing capital, owning or leasing property, or maintains an office) in NYC, for all or any part of its taxable year. The BCT is imposed at a maximum rate of 8.85%. A corporation may be considered to be “doing business” in NYC if it is a partner/member in a partnership/LLC that does business in NYC.
The tax is generally determined upon the basis of the corporation’s business net income minus investment income and other exempt income.
An “S corporation” and its “qualified subchapter S subsidiaries” are not subject to the Business Corporation Tax, but remain subject to the pre-2015 provisions of the General Corporation Tax. NYC does not recognize “S-Corporation” elections, and thus, the S corporation itself is subject to the entity-level BCT.
NYC imposes the UBT on the unincorporated business taxable income of an unincorporated business (e.g., a partnership) that is wholly or partly carried on within NYC at a rate of 4%.
The UBT is an entity-level tax so unincorporated business taxable income is subject to both the UBT and NYC’s personal income tax. Unincorporated businesses are thus subject to double taxation.
An “unincorporated business” means any trade or business conducted or engaged in by an individual or unincorporated entity, including an LLC.
An individual will not be deemed engaged in an unincorporated business solely due to:
- The purchase, holding and sale of property for his or its own account,
- The acquisition, holding or disposition, other than in the ordinary course of a trade or business, of interests in unincorporated entities that are themselves acting for their own account, or
- Any combination of such activities.
An owner of real property, a lessee or a fiduciary will not be deemed engaged in an unincorporated business solely by reason of holding, leasing or managing real property.Real Property Transfer Tax (RPTT)
The RPTT, which is payable by the grantor, applies whenever the consideration for the sale or other transfer is more than $25,000. The tax – which is usually paid as part of the closing costs at the sale or transfer of real property – is imposed as follows:
- In the case of an interest in non-residential real property, if the value is $500,000 or less, the rate is 1.425% of the consideration;
- If the value is more than $500,000 the rate is 2.625%.
A taxable sale includes, among other things, the sale of real property, the grant of a lease of real property (unless the only consideration paid constitutes rent), and the sale of a leasehold interest. The tax is also imposed with respect to the sale or transfer of at least 50% of the ownership in a corporation, partnership, or other entity that owns or leases real property in NYC