New York state income tax: engine rules, 2026

How the tax is computed

Every step the engine takes for New York, in the order it takes them. Steps marked with a filing status or household type apply only there. Each step links the section below that carries New York's figures and the official sources for it; the calculation order page describes every step for all jurisdictions.

What each filing status gets, read back from the engine for a household with $1 of income (so below every phase-out and income test):

1. Per-person mode joint returns with the spouse's age given On a joint return with the spouse's age given, every age test the state applies per taxpayer is evaluated for each spouse at their own age. Without it one household age applies to both.
   engine step (compute_state_tax_detail). Engine convention, no external source: The engine cannot know the second spouse's age unless told.
2. Rate schedule and standard deduction by filing status Single uses the single schedule and deduction; married filing jointly the joint ones. Head of household and married filing separately follow the two steps below.
   New York's values · engine step (select_brackets). Sources (Rate schedule): Instructions for Form IT-2105 Estimated Income Tax Payment Voucher for Individuals (2026) (checked 2026-09-27); Irs releases tax inflation adjustments for tax year 2026 including amendments from the one big beautiful bill (checked 2026-09-27)
3. Married filing separately Where the state publishes its own separate schedule, that one (with half the joint deduction unless a separate deduction is set). Where one schedule applies to every status, that schedule unscaled with the single deduction. Otherwise the joint schedule with every threshold and the deduction halved (computed as the joint tax on twice the income, halved).
   New York's values · engine step (select_brackets). Sources (Rate schedule): Instructions for Form IT-2105 Estimated Income Tax Payment Voucher for Individuals (2026) (checked 2026-09-27); Irs releases tax inflation adjustments for tax year 2026 including amendments from the one big beautiful bill (checked 2026-09-27)
4. Head of household The state's head-of-household schedule where it has one, else the single schedule; the head-of-household deduction where set, else the single deduction.
   New York's values · engine step (select_brackets). Sources (Rate schedule): Instructions for Form IT-2105 Estimated Income Tax Payment Voucher for Individuals (2026) (checked 2026-09-27); Irs releases tax inflation adjustments for tax year 2026 including amendments from the one big beautiful bill (checked 2026-09-27)
5. The income total every income test uses Other ordinary income + retirement distributions (before any exclusion) + conversion + federally taxable Social Security + long-term gains. It stands in for federal adjusted gross income in every threshold, cliff and phase-out below; state subtractions do not reduce it.
   engine step (compute_state_tax_detail). Engine convention, no external source: The inputs are the federal AGI components, so their sum is federal AGI for these income types.
6. Attributing income to each spouse joint returns with each spouse's own amounts given With a caller's split (the API's spouse object), each spouse's own distributions, pension, public pension, conversion, wages and military pay; spouse 2's shares are clamped into the household totals and spouse 1 gets the rest. Without a split, in per-person mode, every item is divided 50/50. Social Security, other ordinary income and gains are always divided 50/50 where a rule needs a per-person amount. The split is used only where a state's rule is per taxpayer; household totals stay authoritative for the base and the income tests.
   engine step (compute_state_tax_detail). Engine convention, no external source: Equal attribution is the neutral split when the owner of a dollar is not known.
7. Keeping the per-spouse shares inside the household joint returns with each spouse's own amounts given After the public-pension and employer-pension carve-outs, if the two spouses' remaining shares add up to more than the household's exclusion-eligible distributions (an inconsistent split), spouse 1's share is reduced so they do not.
   engine step (compute_state_tax_detail). Engine convention, no external source: Input normalisation.
8. Military retirement pay The state's military rule runs first, on military pay alone, per taxpayer: each spouse's own pay at their own age when attributed, otherwise half each at the household age on a joint return. Exempt dollars leave the base; the rest become pension dollars for the general retirement rules.
   New York's values · engine step (compute_state_tax_detail). Sources (Military retirement pay): It201i (checked 2026-09-27)
9. One taxpayer's military exemption Exempt: all of it (below the age split, up to the younger cap). Capped: up to the cap for the age tier, plus the earned-income bonus below the age split when the taxpayer's own wages exceed the threshold, less the taxpayer's own Social Security where the rule says so. Percentage: the percentage (below the age split, up to the younger cap). Then the income limit: above it the exemption is lost, or phased out over the range where one is set.
   New York's values · engine step (military_exempt_one). Sources (Military retirement pay): It201i (checked 2026-09-27)
10. Public pension exemption Public-pension dollars leave the base, uncapped or up to the per-taxpayer cap (each spouse's own public pension against their own cap when attributed), without using up the general exclusion the remaining distributions may claim. Capped-out public dollars stay taxable and cannot draw the private exclusion.
    New York's values · engine step (compute_state_tax_detail). Sources (Public pensions): Instructions for Form IT-201 Full-Year Resident Income Tax Return (2025) (checked 2026-09-27); Form IT-201 Resident Income Tax Return (2025) (checked 2026-09-27)
11. Social Security exempt None of the federally taxable benefit enters the base.
    New York's values · engine step (ss_amount_in_state_base). Sources (Social Security): Form IT-201 Resident Income Tax Return (2025) (checked 2026-09-27)
12. Does a conversion draw the retirement cap? Where the state lets a conversion draw the capped exclusion, and the filer is at or above the conversion age, the conversion is pooled with distributions against the cap.
    New York's values · engine step (compute_state_tax_detail). Sources (Roth conversions): TSB-M-98(7)I: Roth IRAs (Technical Services Bureau Memorandum, December 24, 1998) (checked 2026-09-27)
13. Retirement exclusion per spouse (both ages known) joint returns with the spouse's age given Full-exclusion states exclude each qualifying spouse's own dollars. Capped states give each spouse the single cap for their own age against their own eligible dollars (pension dollars only where the exclusion is pension-only; employer dollars only below the IRA age), less their military exclusion and half of any Social Security offset. Per-return states (and the pooled-if-both-qualify rule when both qualify) apply the joint cap to the couple's pooled eligible dollars when either spouse qualifies. The income tests then apply once to the summed deduction.
    New York's values · engine step (compute_state_tax_detail). Sources (IRA, 401(k) and private pensions): Instructions for Form IT-201 Full-Year Resident Income Tax Return (2025) (checked 2026-09-27); Form IT-201 Resident Income Tax Return (2025) (checked 2026-09-27)
14. Conversion pooled with distributions The conversion joins the distributions against the one cap (with a spouse split in a per-taxpayer state, each spouse's own distributions and conversion against that spouse's cap). Nothing of the conversion is added separately.
    New York's values · engine step (compute_state_tax_detail). Sources (Roth conversions): TSB-M-98(7)I: Roth IRAs (Technical Services Bureau Memorandum, December 24, 1998) (checked 2026-09-27)
15. Retirement exclusion (household) The distributions eligible for the exclusion go through the exclusion below. Taxable public-pension dollars left by a cap are not eligible; below the IRA age only employer-plan dollars are.
    New York's values · engine step (compute_state_tax_detail). Sources (IRA, 401(k) and private pensions): Instructions for Form IT-201 Full-Year Resident Income Tax Return (2025) (checked 2026-09-27); Form IT-201 Resident Income Tax Return (2025) (checked 2026-09-27)
16. Conversion taxed or exempt In full-exclusion states a conversion is exempt at the qualifying age (at any age where the state says so). Elsewhere, unless pooled above, it is ordinary income taxed in full.
    New York's values · engine step (compute_state_tax_detail). Sources (Roth conversions): TSB-M-98(7)I: Roth IRAs (Technical Services Bureau Memorandum, December 24, 1998) (checked 2026-09-27)
17. Cap by age tier The full cap at or above the exclusion age, the lower cap at or above the partial age, otherwise none. Joint returns use the joint cap; every other status the single cap.
    New York's values · engine step (retirement_distributions_in_state_base). Sources (IRA, 401(k) and private pensions): Instructions for Form IT-201 Full-Year Resident Income Tax Return (2025) (checked 2026-09-27); Form IT-201 Resident Income Tax Return (2025) (checked 2026-09-27)
18. The capped deduction Deduction = the smaller of the eligible distributions and the cap, then reduced by the income limit above; the rest of the distributions stays in the base.
    New York's values · engine step (retirement_distributions_in_state_base). Sources (IRA, 401(k) and private pensions): Instructions for Form IT-201 Full-Year Resident Income Tax Return (2025) (checked 2026-09-27); Form IT-201 Resident Income Tax Return (2025) (checked 2026-09-27)
19. One taxpayer's cap joint returns with the spouse's age given For per-spouse calculations, each spouse's cap is the single-column cap for their age tier.
    New York's values · engine step (per_taxpayer_cap_single). Sources (IRA, 401(k) and private pensions): Instructions for Form IT-201 Full-Year Resident Income Tax Return (2025) (checked 2026-09-27); Form IT-201 Resident Income Tax Return (2025) (checked 2026-09-27)
20. Long-term gains in the base Where gains are taxed as ordinary income: net long-term gain less the flat exclusion (never below zero), times the inclusion share. Elsewhere none enters.
    New York's values · engine step (compute_state_tax_detail). Sources (Capital gains): Form IT-201 Resident Income Tax Return (2025) (checked 2026-09-27)
21. State taxable income Other ordinary income + Social Security, retirement income, conversion and gains left in the base − standard deduction − personal exemption − age subtractions.
    engine step (compute_state_tax_detail). Engine convention, no external source: The order of subtraction follows the state forms; each amount is sourced at its own step.
22. No tax at or below zero State taxable income at or below zero returns a tax of 0 (credits are not refundable and nothing below applies).
    engine step (compute_state_tax_detail). Engine convention, no external source: Every credit the engine carries is nonrefundable, so nothing below can make a zero tax negative; each credit is sourced at its own step.
23. Separate-return scaling married filing separately For the halved-joint rule, taxable income is doubled before the schedule and the result halved.
    New York's values · engine step (compute_state_tax_detail). Sources (Rate schedule): Instructions for Form IT-2105 Estimated Income Tax Payment Voucher for Individuals (2026) (checked 2026-09-27); Irs releases tax inflation adjustments for tax year 2026 including amendments from the one big beautiful bill (checked 2026-09-27)
24. The rate schedule Each bracket's rate on the part of taxable income inside it, summed. No rounding: the result is carried in full precision.
    New York's values · engine step (apply_state_brackets). Sources (Rate schedule): Instructions for Form IT-2105 Estimated Income Tax Payment Voucher for Individuals (2026) (checked 2026-09-27); Irs releases tax inflation adjustments for tax year 2026 including amendments from the one big beautiful bill (checked 2026-09-27)
25. Tax-benefit recapture On state AGI (the income in the base before deductions) above the start, the recapture below is added.
    New York's values · engine step (compute_state_tax_detail). Sources (Surtaxes and recapture): Instructions for Form IT-2105 Estimated Income Tax Payment Voucher for Individuals (2026) (checked 2026-09-27); It201i 2025 (checked 2026-09-27)
26. The recapture worksheets For each bracket below the filer's top one, its benefit (flat rate times the bracket bottom, less the schedule tax on it, less the lower brackets' benefit) is phased in over $50,000 of income above the larger of $107,650 and the bracket bottom. Fully phased in, all taxable income is taxed at the top rate. Where the first worksheet applies to taxable income below its bracket, the flat rate of that bracket applies to all of it, phased in the same way.
    New York's values · engine step (ny_tax_benefit_recapture). Sources (Surtaxes and recapture): Instructions for Form IT-2105 Estimated Income Tax Payment Voucher for Individuals (2026) (checked 2026-09-27); It201i 2025 (checked 2026-09-27)
27. Credits cannot make the tax negative The credits are subtracted and the result floored at zero.
    engine step (compute_state_tax_detail). Engine convention, no external source: Every credit the engine carries is nonrefundable; each credit is sourced at its own step.

Worked examples

Computed by the engine for the fixed households below (the same ones for every state, so states compare directly). Federal tax is not supplied, so a federal-tax deduction is not taken; the income tests use the sum of the components as income.

Line by line

The intermediate lines the engine records while it computes each example (its detail record, printed as it comes out; lines that are zero are left out). The engine's documentation build checks that the lines add up to the taxable income and the tax, for every state, filing status and a grid of households. Each line links the engine step that produces it.

What the engine does not calculate, and known approximations

• The public-pension input is read as a New York or federal government pension; other states' government pensions do not qualify in New York.

What the engine does not calculate for any state (itemized deductions, credits beyond those listed, part-year residents, dependents, blindness and disability, and more) is listed on the calculation order page.

Verification

Worksheet-tested Engine 1.2.0 tests follow the 2026 IT-2105-I tax rate schedules and recapture worksheets, including the head-of-household schedule.

• Golden scenarios (hand-computed expected tax, asserted to within $1): S08, H06, G26NYC, NYPUB1, NYPRV1, NYREC1, NYREC2, NY-public-vs-private.
• State-specific unit tests: test_ss_exempt_states_dont_tax_ss, test_capped_exclusion_states, test_v3_folds_v2, test_no_state_uses_placeholder_schedule, test_ny_conversion_and_1030_bracket, test_pension_income_inert_and_clamped, test_d5_public_pension_ny_hi, test_d11_ny_recapture, test_legacy_request_equals_v2, test_ny_per_spouse, test_ny_hoh_schedule_and_recapture.
• Structural tests covering every state: 3.
• State forms and worksheets followed in the test derivations: IT-2105-I (2026) rate schedules and worksheets.