New York’s brackets, recapture and city tax
New York taxes capital gains exactly like wages, from 3.9% up to 10.9% on income above $25 million. Its less obvious feature is benefit recapture: once New York AGI passes $107,650, the state gradually takes back the advantage of the lower brackets, so a gain that lifts income through the recapture range can cost more than the marginal rate printed in the table.
New York City residents add city income tax of up to 3.876% on the same gain, and Yonkers residents pay a surcharge; both sit outside this state estimate. A nonresident still owes New York tax on gains from New York real estate, and a move out of state before a sale is examined closely. The worked example in the guide below shows a $50,000 gain raising state tax by $3,513.38 for a single filer crossing the recapture threshold.
New York capital gains can change both the tax bracket and benefit recapture
New York does not give an ordinary resident stock gain the federal long-term preferential rate. The resident calculation uses the state taxable-income schedule, and the 2026 lower brackets differ from older tables. This worksheet now applies the rates and dollar bases printed in the official 2026 IT-2105 instructions. Enter prepared New York taxable income and New York adjusted gross income in each annual scenario; federal ordinary taxable income and NIIT MAGI are different measures.
When New York adjusted gross income exceeds $107,650, the official instructions require the applicable tax computation worksheet. The recapture calculation uses both adjusted gross income and taxable income, with a $50,000 phase-in and different worksheets for single or separate filers, joint filers, and heads of household. A sale can therefore increase tax on income that was already present. This tool computes the two annual resident estimates independently and subtracts the first from the second, including the printed recapture amounts and four-decimal phase-in rounding.
For example, a single resident with prepared New York taxable income of $100,000 and New York adjusted gross income of $108,000 has a modeled state tax of $5,336.62 before credits. If a $50,000 gain raises those prepared figures to $150,000 and $158,000, the modeled state amount becomes $8,850.00, a $3,513.38 increase. That difference is greater than 5.9% of the gain because the sale also completes benefit recapture. The example holds other items fixed; it does not automatically approve a deduction or determine actual sale exclusions.
New York City tax, Yonkers tax, credits, MCTMT and nonresident allocation are outside this resident mode. Use the entered-final-liability comparison if those amounts affect the decision. The state nonresident FAQ explains that residents report all-source income, while gains connected with New York real property can remain New York-source after a move. Nonresident tax begins with a resident-equivalent calculation and applies the source-income percentage; this resident worksheet does not perform that allocation. Confirm domicile, sale location and the correct filing status before entering a combined result.
New York preparation checklist
- Full-year New York resident status and matching state filing category
- Prepared New York taxable income and NYAGI for both annual scenarios
- City taxes, credits and source-income allocation require final-liability mode
Official 2026 IT-2105 instructions: state rate schedules and recapture worksheets. Resident estimates use the printed dollar bases and phase-in rounding. For a part-year or nonresident return, prepare the final liabilities separately.