Federal and state taxes reduce your New York paycheck by 20 to 30 percent, depending on your income and what you claim on your W-4 form

Your employer withholds four separate taxes from each paycheck: federal income tax, Social Security tax (6.2%), Medicare tax (1.45%), and New York state income tax. The amount varies based on your gross pay, your filing status, the number of dependents you claim, and whether you work in New York City (which adds a city income tax). There is no single number that applies to everyone.

Federal withholding is the largest and most variable piece. It depends on what you entered on your W-4 form when you started the job. If you claimed zero dependents and took no extra deductions, federal withholding will be higher. If you claimed dependents or asked for extra withholding to be removed, federal withholding will be lower. Social Security and Medicare are fixed percentages that do not change based on your W-4.

New York state income tax ranges from 4% to 10.9% of your gross pay, depending on your income bracket. New York City residents pay an additional city income tax that ranges from 3.876% to 4.85%. If you work in New York City but live outside it, you may owe city tax anyway, depending on where you work.

Key Takeaways

  • Social Security (6.2%) and Medicare (1.45%) are fixed deductions that come out of every paycheck for most workers.
  • Federal income tax withholding changes based on what you claim on your W-4 form, so two people earning the same salary can have different amounts withheld.
  • New York state income tax ranges from 4% to 10.9% depending on your income bracket, and New York City residents pay an additional 3.876% to 4.85% city tax.
  • Your paycheck stub shows exactly what was withheld for each tax, so you can see the breakdown rather than guessing.

How federal income tax withholding works

Federal withholding is calculated using IRS tables that account for your pay frequency (weekly, biweekly, monthly), your filing status, and the number of allowances or deductions you claimed on your W-4. The more allowances you claim, the less federal tax is withheld. The fewer you claim, the more is withheld.

Most people claim one allowance per dependent child, but you can also claim allowances for yourself, your spouse, or other dependents. You can also request that your employer withhold an extra amount each pay period if you expect to owe taxes at the end of the year. This is common for self-employed people or those with side income.

If you change jobs or your life situation changes (marriage, divorce, new child), you should fill out a new W-4 form. Your employer is required to use your most recent W-4 on file. If you do not update it, your withholding will not change, and you may end up owing money or getting a large refund.

Social Security and Medicare taxes are the same for everyone

Social Security tax is 6.2% of your gross pay, up to a wage cap that changes each year. In 2024, the cap is $168,600, meaning once you earn that much in a calendar year, Social Security tax stops being withheld from your remaining paychecks. Medicare tax is 1.45% of your gross pay with no cap, so it continues no matter how much you earn.

If you earn over $200,000 as a single filer (or $250,000 if married filing jointly), an additional 0.9% Medicare tax is withheld. This is called the Net Investment Income Tax, though it applies to wages as well as investment income. Your employer will withhold it automatically once you cross the threshold.

These two taxes are not optional and do not depend on your W-4 form. Every employee pays them unless you are in a specific category (certain religious groups, some government employees) that is exempt.

New York state income tax brackets and rates

New York state income tax is progressive, meaning the rate increases as your income increases. The brackets change each year. For 2024, the rates range from 4% on the lowest income to 10.9% on income over $685,000. Most workers fall into the 5.85% to 6.85% range.

Your employer uses your W-4 form and New York state withholding forms to calculate how much state tax to withhold. If you claim dependents or request adjustments, state withholding will be lower. If you claim zero dependents, state withholding will be higher.

New York allows you to claim a credit for property taxes or rent you pay, but that credit is claimed when you file your tax return, not withheld from your paycheck. Your paycheck withholding is based on your income and filing status alone.

New York City income tax for residents and some commuters

If you live in New York City, you pay city income tax in addition to state and federal taxes. The city tax rates range from 3.876% to 4.85% depending on your income. The brackets are different from the state brackets, so your city tax rate may be higher or lower than your state rate.

If you work in New York City but live outside it, you generally do not owe city tax. However, if you work for a New York City employer and are considered a resident for tax purposes, you may owe it. The rules are complex, so check with your employer's payroll department or a tax preparer if you are unsure.

Your paycheck stub will show city tax as a separate line item if you owe it. If you do not see it listed, you are not being withheld for city tax.

How to read your paycheck stub and verify withholding

Your paycheck stub breaks down every deduction. It will show your gross pay (before any deductions), then list federal income tax, Social Security, Medicare, state income tax, and city tax (if applicable) as separate line items. Each line shows the amount withheld that pay period and often shows the year-to-date total.

Add up the federal, state, and city income tax withholdings, plus Social Security and Medicare, and you can see roughly what percentage of your gross pay is being deducted. If the number seems wrong, check that your W-4 form matches your current situation. If you claimed zero dependents years ago and now have children, your withholding is probably too high.

If you notice an error on your stub — for example, city tax being withheld when you do not live in the city — report it to your payroll department immediately. Errors can usually be corrected on the next paycheck.

Adjusting your withholding if too much or too little is being taken out

If you get a large refund every year, too much federal tax is being withheld. You can reduce withholding by filling out a new W-4 form and claiming more allowances or requesting less extra withholding. If you owe money every year, too little is being withheld, and you should claim fewer allowances or request extra withholding.

The IRS provides a withholding calculator on its website (irs.gov) that walks you through your situation and recommends how many allowances to claim. You can also use it to figure out whether you should request extra withholding or a reduction.

Changes to your W-4 take effect on your next paycheck, though some employers may take a pay period or two to process the change. If you are making a major change (like going from zero allowances to five), you may see a noticeable difference in your take-home pay.

Frequently Asked Questions

Why is my New York paycheck smaller than someone else's if we earn the same salary?

The most common reason is your W-4 form. If you claimed zero dependents and they claimed three, they have less federal tax withheld. You may also live in New York City while they live outside it, adding city tax to your check. Or one of you may have requested extra withholding to cover other income or taxes owed.

Does New York have a local income tax outside of New York City?

No. Only New York City residents pay city income tax. The rest of New York State pays only federal and state income tax, plus Social Security and Medicare. Some counties have sales taxes, but not income taxes.

What happens if I do not fill out a W-4 form?

Your employer will withhold taxes as if you claimed zero allowances, which is the highest withholding rate. You should fill out a W-4 form as soon as possible to adjust your withholding to match your actual situation.

Can I claim my spouse as a dependent on my W-4?

No. You can only claim dependents (children and other relatives you support). You can claim an allowance for your spouse if they do not work or have little income, but the process is different. Check the W-4 form instructions or ask your payroll department for guidance.

Is the Social Security wage cap the same in New York as everywhere else?

Yes. The Social Security wage cap is federal and applies to all workers in all states. Once you earn the cap amount in a calendar year, Social Security tax stops being withheld, even if you earn more in later months.