Everyone must pay federal capital gains taxes on profits from investments or sales of capital assets, and if you’re a New York resident, you’ll have to pay state and possibly local capital gains taxes, as well. The amount of capital gains taxes owed depends on your income tax bracket and whether you held the investment for the short- or long-term. For tax year 2017, the top marginal capital gains tax rate in New York is 31.5 percent, the second highest in the nation after California. While the federal government taxes capital gains at a lower rate than ordinary income, most states tax capital gains at the ordinary income rate, the same as wages, and New York is no exception.
New York State Tax Brackets
There are eight marginal tax brackets in the state of New York, which range from 4 percent to 8.82 percent, with additional amounts charged for all but the lowest bracket.
These are the rates for single filers in 2017:
- Up to $8,500 in adjusted gross income (AGI) : 4 percent
- $8,500 to $11,700: 4.5 percent plus $340.
- $11,700 to $13,900: 5.25 percent plus $484.
- $13,900 to $21,400: 5.9 percent plus $599.50
- $21,400 to $80,650: 6.45 percent plus $1,042.
- $80,650 to $215,400: 6.65 percent plus $4,863.63
- $215,400 to $1,077,550: 6.85 percent plus $13,824.50
- Over $1,077,550: 8.82 percent plus $72,881.78
These are the rates for married couples filing jointly in 2017:
- Up to $17,150 in adjusted gross income: 4 percent
- $17,150 to $23,600: 4.5 percent plus $686
- $23,600 to $27,900: 5.25 percent plus $976.25
- $27,900 to $43,000: 5.9 percent plus $1,202
- $43,000 to $161,550: 6.45 percent plus $2,092.90
- $161,550 to $323,200: 6.65 percent plus $9,739.38
- $323,200 to $2,155,350: 6.85 percent plus $20,489.10
- Over $2,155,350: 8.82 percent plus $145,991.38
New York City Taxes
New York City residents pay additional capital gains and other taxes. This makes their combined state and local income tax rate a whopping at 12.7 percent.
For single filers, the following rates apply in 2017:
- Up to $12,000 AGI: 3.078 percent
- $12,000 to $25,000: $ 369 plus 3.762 percent of the excess over $12,000
- $25,000 to $50,000: $858 plus 3.819 percent of the excess over $25,000
- $50,000 and up: $1,813 plus 3.876 percent of the excess over $50,000
For married couples filing jointly, the following 2017 New York City tax rates apply:
- Up to $21,600 AGI: 3.078 percent
- $21,600 to $45,000: $665 plus 3.762 percent of the excess over $21,600
- $45,000 to $90,000: $1,545 plus 3.819 percent of the excess over $45,000
- $90,000 and up: $3,264 plus 3.876 percent of the excess over $90,000
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Federal Capital Gains Taxes
Short-term capital gains refer to assets held less than one year, and for federal purposes are taxed at ordinary income rates. For long-term capital gains on assets held more than one year, most taxpayers pay a 15 percent rate for tax year 2017. If the taxpayer exceeds the thresholds for the 39.6 percent ordinary tax rate, which for 2017 is $418,400 for single filers; $470,700 for those married filing jointly; $444,550 for heads of household; and $235,350 for those married but filing separately, they will pay a long-term capital gains rate of 20 percent. There are other exceptions to the 15 percent rate, including capital gains on the sale of art or other collectibles, which is taxed at a maximum of 28 percent, and the sale of certain small business stock which is also taxed at a 28 percent maximum.