Are NY State and City income taxes marginal? (inclusive, pay)

[ricownage]

Like federal income tax?
i.e. The tax brackets apply only to the dollars earned within that amount, so you for example one might pay x% from $0-1000, y% from $1001-3000, z% from $3001 - 6000. (theoretically).
or are they all inclusive? i.e. someone earning $6000 would pay z% on everything.

[mathjak107]

they are bracketed

http://www.nyc.gov/html/dof/html/pdf...s/pitrates.pdf

[ricownage]

so does that mean I pay $2.907 for income from $0-12,000 , %3.524 for $12000-25000...etc?

[mathjak107]

that a percentage not a dollar figure... this is new york city tax not including ny state which is in addition , 12,000 x .0297=356.40 tax

[ricownage]

sorry, the dollar sign on 2.907 was supposed to be a percentage. but i mean, do i pay different percentages for each respective bracket of income, or do i pay a single percentage for all my income?

[mathjak107]

its graduated , just follow the instructions in the link...up to x amount its this much, from x to the next level its this mush ,etc

[holden125]

NYS rates are marginal but the 6.85% rate starts at a fairly low threshold ($20K taxable income for single, $40K for married filing jointly). NYC rates are marginal but there's very little difference between the brackets so it matters little.

NYS now has a complicated exception ("recapture") that only applies at the top end ($200 K and up for single person, $300K and up for married filing jointly). In 2009 two new brackets were created: 7.85% for single people with taxable income of $200K-500K and married filing jointly with taxable income of $300K-500K, and 8.97% for any filers with taxable income over $500K. If you're into one of these higher brackets by more than $50,000, you pay the high rate on every dollar earned. Not marginal.

For the first $50,000 in taxable income over the bracket's low point, there's a phase-in. As a result, if you're single and make between $200-250K in taxable income, you'll lose the benefits of the lower brackets on a pro-rata basis over the $50,000 range.

For example, on the first $200,000 of taxable income you'd pay $13,303. That is $2,397 less than what you'd pay if you had to pay 7.85% of all of that income. A single filer with a taxable income of $220K will pay 7.85% on the taxable income from $200K to $220K, which is normal for a marginal rate. Because $220K is 40% of the way from $200K to $250K, that taxpayer also will lose 40% of the $2,397 savings from the lower brackets due to "recapture." Thus having to pay an extra $959. At $245K (90% of the way from $200K to $250K) you'd lose 90% of the benefit of the lower brackets, and pay an extra $2,157.