New York City Taxes

While many cities collect income taxes that are separate from and in addition to state and federal taxes, New York City taxes are notoriously complicated and burdensome -- not only re-taxing corporate business profits, but also collecting taxes from otherwise untaxed entities like LLCs, partnerships, and sole proprietorships.

Unincorporated Business Tax

New York City collects an Unincorporated Business Tax on the business income of every unincorporated business (sole proprietorships, partnerships, and LLCs) carried on - wholly or partly - in New York City. If the business can demonstrate that a portion of its business was done outside New York City, that portion will not be subject to this tax. The rate is 4% of taxable income. You must file for and pay this tax if

• You have total gross income of more than $25,000 for a partnership or LLC with more than one member, or more than $75,000 for a sole proprietorship or single-member LLC, prior to any deduction for the cost of goods sold or services performed; or
• You have an unincorporated business taxable income of more than $15,000 for a partnership or LLC with more than one member, or more than $35,000 for a sole proprietorship or single-member LLC.

If your tax is $1,800 or less, a credit is issued for the entire amount of the tax and no tax will be due. If the tax is between $1,800 and $3,200, a credit is allowed in the amount of the tax multiplied by (3200 minus the tax), then divided by 1400.

The website of the New York City Finance Commissioner has tax forms and other information about the Unincorporated Business Tax.

General Corporation Tax

If your corporation does business, employs capital, owns or leases property for business purposes, or maintains an office in New York City, it is subject to the General Corporation Tax. This tax only applies to incorporated businesses (unincorporated businesses are subject to New York City's Unincorporated Business Tax). If the corporation can demonstrate that a portion of its business was done outside New York City, that portion will not be subject to this tax. New York City's General Corporation Tax is imposed at the highest of the following four rates

• 8.85% of net income from New York City sources;
• .15% of total capital allocated to New York City;
• 8.85% of 30% of net income, plus the amount of salaries or other compensation paid to any person, including officers, who at any time during the year owned more than 5% of stock; or
• Minimum tax base of $300.

S corporations are not recognized by New York City and are subject to full corporate income tax.

The website of the New York City Finance Commissioner has tax forms and other information about the General Corporation Tax.

Note: The information contained on this page is meant for general, information purposes only, and CMLP makes no claim as to comprehensiveness or accuracy of the information. Because of the complexity of tax issues associated with starting any business, you are encouraged to consult with a tax attorney and/or accountant to ensure compliance with federal, state, and local tax requirements. The CMLP is not a substitute for individualized legal advice, especially not individualized tax advice.