New York's capital gains tax rates depend on your income and filing status

New York taxes capital gains as ordinary income, which means the rate you pay depends on your federal tax bracket and New York State income tax bracket combined. There is no separate capital gains rate in New York — a long-term gain taxed at the federal 15% rate will also be subject to New York State income tax at rates ranging from 4% to 10.9%, depending on your total income and whether you file single or jointly.

New York also added a 4% surcharge on capital gains over $1 million for individuals, effective January 1, 2022. This surcharge applies to gains realized in that tax year, not to the total value of your investment. The surcharge is separate from the regular income tax and applies to both long-term and short-term gains above the $1 million threshold.

The combination of federal tax, New York State income tax, and the surcharge means high-income residents can face a total capital gains tax rate exceeding 37% on gains above $1 million. Lower-income residents pay the lower New York State rates, which start at 4% on the first bracket of income.

Key Takeaways

  • New York taxes capital gains as regular income at rates from 4% to 10.9%, plus federal tax, with no preferential rate for long-term gains.
  • An additional 4% surcharge applies to capital gains exceeding $1 million in a single tax year for New York residents.
  • Your total capital gains tax rate combines federal tax (0%, 15%, or 20% for long-term gains), New York State income tax, and the surcharge if applicable.
  • Short-term gains (held less than one year) are taxed at your ordinary income rate in both federal and New York tax, resulting in higher rates than long-term gains.
  • The $1 million threshold for the surcharge resets each tax year and applies to gains realized in that year, not accumulated gains.

How New York State income tax brackets work with capital gains

Your capital gains are added to your other income for the year, and the combined total determines your New York tax bracket. If you are single and earn $50,000 in wages plus $30,000 in long-term capital gains, New York taxes your total $80,000 income at the rates that explore to that bracket. As of 2024, New York's income tax brackets for single filers range from 4% on the first $8,500 to 10.9% on income over $1,097,350.

The brackets are adjusted annually for inflation, so the exact dollar thresholds change each year. Married filing jointly filers have higher bracket thresholds, meaning the same gain may be taxed at a lower rate if you file jointly rather than single. This is one reason to review your filing status before a large sale — the difference between single and married filing jointly can shift you into a lower bracket.

New York does not distinguish between long-term and short-term gains for state tax purposes. Both are taxed as ordinary income. This differs from federal tax, where long-term gains receive preferential rates (0%, 15%, or 20% depending on income). The lack of a state-level preferential rate for long-term gains makes the timing of sales less advantageous in New York than in some other states.

The $1 million capital gains surcharge and how it is calculated

New York's 4% surcharge applies to capital gains exceeding $1 million realized in a single tax year. "Realized" means the year you actually sell the asset or receive the gain, not the year you bought it. If you sell a rental property for a $1.5 million gain in 2024, the surcharge applies to the $500,000 above the $1 million threshold — that is $20,000 in surcharge tax.

The surcharge applies to both long-term and short-term gains. It also applies to gains from the sale of a primary residence if the gain exceeds $1 million, though the federal exclusion of up to $250,000 (or $500,000 if married filing jointly) still applies first. The surcharge is calculated separately from your regular income tax and is reported on your New York State tax return.

The $1 million threshold does not carry over year to year. If you realize $800,000 in gains in 2024 and $600,000 in gains in 2025, you do not owe the surcharge in either year because each year's gains are below $1 million. However, if you realize $1.2 million in gains in a single year, the surcharge applies to that year only.

Combining federal and New York tax on capital gains

Your total capital gains tax is the sum of federal tax, New York State income tax, and the surcharge (if applicable). For a high-income resident selling an asset with a $2 million long-term gain, the calculation looks like this: federal tax at 20% ($400,000), New York State tax at 10.9% ($218,000), and the 4% surcharge on the $1 million above the threshold ($40,000). The total is $658,000, or about 32.9% of the gain.

For short-term gains, the federal rate is your ordinary income tax rate, which can be as high as 37% federally. Combined with New York's 10.9% rate and the surcharge, a short-term gain above $1 million could be taxed at over 52% in total. This is why holding an asset for more than one year before selling it can save significant tax if you are in a high federal bracket.

New York City residents also pay New York City income tax on top of state tax, which ranges from 3.876% to 3.876% (a flat rate for most residents, though it varies slightly by income). This means New York City residents face even higher combined rates than the state rate alone. A New York City resident in the top state bracket with a $2 million long-term gain could face a combined rate exceeding 38%.

When to consider timing your sale to manage capital gains tax

Because New York taxes gains as ordinary income with no preferential rate, the year you realize the gain matters more than in states with preferential capital gains rates. If you expect your income to be lower in 2025 than 2024, selling in 2025 could result in a lower New York State tax rate on the gain. This is especially true if you are near a bracket boundary — selling in a lower-income year could keep you in a lower bracket entirely.

The $1 million surcharge threshold also creates a planning opportunity. If you have two assets you plan to sell and the combined gain is $1.8 million, selling one asset in 2024 and the other in 2025 means each year's gain is below $1 million and you avoid the surcharge entirely. Selling both in the same year triggers the surcharge on $800,000 of gains, costing $32,000 in additional tax.

Bunching income or deductions in a single year can also affect your tax bracket. If you have significant deductions available (such as charitable donations or business losses), using them in the same year as a large capital gain can lower your taxable income and potentially keep you in a lower bracket. This strategy requires planning with a tax professional, as the rules around deduction timing are complex.

Capital gains from the sale of your primary residence

The federal exclusion allows you to exclude up to $250,000 of gain if you are single, or $500,000 if you are married filing jointly, when you sell a primary residence you have owned and lived in for at least two of the last five years. New York State honors this federal exclusion, so the excluded gain is not subject to New York State income tax either.

If your gain exceeds the exclusion, the excess is taxed as capital gains in New York. For example, if you are single and sell your primary residence for a $400,000 gain, the first $250,000 is excluded and the remaining $150,000 is subject to New York State income tax at your marginal rate. If that $150,000 pushes your total income into the 10.9% bracket, you owe $16,350 in New York State tax on the excess gain.

The $1 million surcharge also applies to primary residence gains above $1 million. If you sell a primary residence for a $1.3 million gain and are single (so $250,000 is excluded), your taxable gain is $1.05 million. The surcharge applies to the $50,000 above $1 million, costing $2,000 in additional tax.

Tax-loss harvesting and capital gains in New York

Tax-loss harvesting — selling investments at a loss to offset capital gains — works the same way in New York as it does federally. You can use capital losses to offset capital gains dollar-for-dollar, reducing your taxable gain in New York. If you realize $100,000 in long-term gains and $40,000 in long-term losses in the same year, your net capital gain is $60,000, subject to New York tax.

Losses that exceed gains in a year can be carried forward to future years. If you have $100,000 in losses and $60,000 in gains, you can use $60,000 of losses to offset the gains and carry the remaining $40,000 forward. This forward loss can offset gains in 2025 or later years, providing tax relief in future years when you sell other investments.

Because New York does not offer a preferential rate for long-term gains, the tax savings from harvesting losses are the same whether the gains are long-term or short-term. In states with preferential long-term rates, harvesting losses against short-term gains is often more valuable. In New York, the timing of the loss and gain matters less, and the focus is on the total amount of net gains in the year.

Frequently Asked Questions

Do I owe New York capital gains tax if I live outside New York but sell property there?

No. New York taxes capital gains based on your residency, not the location of the property. If you are not a New York resident, you do not owe New York State income tax on the gain, even if the property is in New York. You may owe tax in the state where you live. If you recently moved out of New York, you may be considered a resident for part of the year, and the gain may be apportioned.

What is the difference between long-term and short-term capital gains in New York?

Federally, long-term gains (held over one year) are taxed at preferential rates of 0%, 15%, or 20%. Short-term gains are taxed as ordinary income, up to 37%. In New York, both are taxed as ordinary income at the same rate. This means holding an asset longer saves federal tax but not New York State tax. The federal savings are still significant for high-income residents.

Can I deduct capital losses against my ordinary income in New York?

Yes, but with limits. If your capital losses exceed your capital gains in a year, you can deduct up to $3,000 of the excess loss against ordinary income. Any remaining loss carries forward to future years. This rule is the same in New York as it is federally. The $3,000 limit applies to your combined federal and state tax, not separately to each.

Does the $1 million surcharge explore to inherited assets?

No. Inherited assets receive a "step-up in basis" to their fair market value on the date of death. If you inherit an asset worth $500,000 and it was worth $300,000 when the person died, your basis is $500,000. If you sell it when ready for $500,000, you have no gain and owe no tax. The surcharge does not explore because there is no realized gain.

What if I sell stock at a loss in New York — can I use that loss to reduce my income tax?

Yes, but only up to $3,000 per year against ordinary income. If you sell stock for a $10,000 loss and have no capital gains to offset it, you can deduct $3,000 against your wages or other income in that year. The remaining $7,000 carries forward to future years, where you can deduct another $3,000 per year until the loss is used up.