Retiring in New York: What the State Actually Takes

On the ordinary retirement profile — $34,000 of Social Security and $61,000 of plan distributions — New York takes $1,617 a year in state income tax.

That is the number people compare, and it is the smallest of three. Property tax adds about $6,960 on the state's $480,000 median home, and insurance another $1,710. The three together come to $10,287, placing New York 38th of 50.

A note before you start. This is general education, not tax advice. Every New York figure comes from this site's own fifty-state income-tax dataset and its retirement tax engine, computed for a single filer aged 70 unless stated otherwise; property tax, median home price and insurance figures come from the site's core state dataset. Rates are for tax year 2026. Property tax is assessed locally in most states, so the effective rate here is a statewide figure rather than your county's.

1. What New York takes from retirement income

On Social Security. New York does not tax Social Security benefits. The federally taxable portion carried into federal AGI is subtracted in full on the New York return, with no income threshold, no age condition, and no phase-out. Railroad Retirement Board benefits are treated the same way.

On 401(k) and IRA distributions. the $20,000 figure is per taxpayer, not per return, and that distinction is the reason the married-joint entry reads $40,000 rather than $20,000. New York's pension and annuity income exclusion lets each individual who was 59 1/2 before the start of the tax year subtract up to $20,000 of qualifying pension and annuity income — including 401(k), 403(b) and traditional IRA distributions — from federal AGI. On a joint return where both spouses are 59 1/2 and both have their own qualifying income, each subtracts up to $20,000 against their own income, for $40,000 combined. A joint return where only one spouse has retirement income gets $20,000, not $40,000: the exclusions are not transferable between spouses. Four conditions that summaries drop: (1) the cap is $20,000 in total per person regardless of how many sources the income comes from, so two separate IRAs do not produce two exclusions; (2) a taxpayer who turns 59 1/2 during the year may exclude only the income received after reaching that age; (3) the exclusion is not available at all before 59 1/2, so an early retiree at 57 gets nothing; and (4) it does not apply to income already fully excluded as a government pension — see the pensions block, where the interaction matters. The exclusion amount is a fixed statutory figure and is not indexed for inflation.

2. The rule that decides your New York bill

The asymmetry is the whole story in New York, and collapsing these three would be the single worst simplification available in the figure here. Pensions paid by New York State, by a New York local government, or by the federal government — which includes military retirement pay — are excluded IN full, with no dollar cap and no age requirement: a 45-year-old retired from twenty years of federal or military service pays no New York tax on that pension. A private pension, by contrast, gets only the same $20,000-per-person exclusion that covers 401(k) and IRA money, and only from age 59 1/2. One consequence worth stating: because a fully excluded government pension is not 'included in federal AGI' after the government exclusion, a retiree with both a federal pension and a private annuity can generally still claim the $20,000 exclusion against the private annuity.

New York's retirement picture is far better than its top-line 10.9% rate suggests for a public-sector or military retiree and only modestly better than average for a private-sector one — the state exempts government and military pensions without limit but caps private pension and 401(k) relief at $20,000 a person from age 59 1/2.

New York City residents get the same state retirement exclusions: the city tax is computed on the same New York taxable income, so a subtraction taken for state purposes reduces the city tax too. Yonkers residents likewise benefit, since the Yonkers surcharge is a percentage of the state tax.

3. What New York charges at three income levels

The same state, three retirements. All figures are for a single filer aged 70.

The marginal rate at the typical profile is 5.4%. That is what an extra dollar of distribution costs — a larger number than the 1.7% effective rate, and the one that matters when deciding how much to withdraw.

A married couple with $48,000 of Social Security and $62,000 of distributions pays $232.

4. Property tax, and why it lands harder in retirement

An effective rate of 1.4% on the state's $480,000 median home is about $6,960 a year.

For a retiree this is a harder cost than income tax, and the reason is structural: property tax is levied on the house, while retirement income falls. A bill sized to a working income arrives every year after the income has gone.

It is also assessed locally almost everywhere, so a statewide effective rate conceals real variation between counties. Treat the figure above as the state's shape rather than as your bill.

New York does have a homestead provision, and it is the one lever on this line worth understanding.

New York has no broad ad-valorem homestead exemption. Instead it offers the STAR (School Tax Relief) program, which reduces school district property tax only (not county/town/city tax): Basic STAR exempts $30,000 of assessed home value from school tax for owner-occupied primary residences with household income under $250,000, regardless of age. Enhanced STAR provides a larger exemption (assessed-value exemption around $81,400 for the 2025 benefit year) for homeowners 65+ with household income under roughly $98,700. New homeowners generally receive STAR as a check/credit from NY State rather than a direct assessment reduction; existing STAR exemption recipients keep the older assessment-reduction form. Not automatic — must register with NY State Tax Department.

Two things about homestead rules catch people out after a move. They almost always require the property to be your primary residence, which a snowbird splitting the year has to be able to demonstrate. And several states require an application to the county rather than granting it automatically — a benefit you qualify for and never claimed is worth nothing.

5. Insurance, the line nobody prices

Average home insurance in New York: $1,710 a year — 9th cheapest of the fifty states.

This is the line almost no retirement comparison includes, and across the country it varies more than income tax does: from Hawaii's $900 to Florida's $8,375, a ninefold spread.

For a retiree it behaves like a second property tax. It rises independently of income, a fixed-income household absorbs the whole increase, and it is a condition of the mortgage if you still have one.

6. What retiring in New York actually costs

Income tax on the typical retirement profile, plus property tax and insurance on each state's own median home. New York is shown against its own neighbours in the ranking, and against the extremes.

New York comes to $10,287, 38th of 50.

Income tax is 16% of that total. It is the line every comparison leads with and, here, not the largest of the three.

One large caveat, and it matters. Each row uses that state's own median home, and those differ a great deal. So this compares the typical house in each state, not the same house in each state — buying below a state's median improves its figure materially.

7. Whose pension it is changes the bill

New York does not tax all pensions the same way. The same $50,000 costs $1,023 if it is a private employer pension and $0 if it is a government one. The asymmetry is the whole story in New York, and collapsing these three would be the single worst simplification available in the figure here. Pensions paid by New York State, by a New York local government, or by the federal government — which includes military retirement pay — are excluded IN full, with no dollar cap and no age requirement: a 45-year-old retired from twenty years of federal or military service pays no New York tax on that pension. A private pension, by contrast, gets only the same $20,000-per-person exclusion that covers 401(k) and IRA money, and only from age 59 1/2. One consequence worth stating: because a fully excluded government pension is not 'included in federal AGI' after the government exclusion, a retiree with both a federal pension and a private annuity can generally still claim the $20,000 exclusion against the private annuity. This is the distinction most published comparisons flatten. A state described as exempting pension income may exempt only the government kind — and a private-sector career is the case most states treat least generously.

8. What a Roth conversion costs in New York

Converting $50,000 to a Roth costs an extra $2,712 in New York tax — 5.4 cents on the dollar.

These are computed, not read off the bracket table, which matters because a conversion large enough to be worth making usually leaves the bracket it started in.

The state's share is the part you can move. Convert in a year you are resident somewhere with no income tax and it is zero; convert here and it is 5.4%. The federal tax is due either way.

9. What part-time work costs here

$20,000 of part-time work costs an extra $1,080 in New York tax — an effective 5.4% on the earnings.

Compare that with the 5.4% a Roth conversion costs. The state treats the two identically, which keeps the decision a non-tax one.

Two federal rules apply on top and neither depends on your state. Earnings can raise the taxable share of Social Security, and claiming before full retirement age exposes you to the federal earnings test.

10. The order to draw your accounts in

The order you draw accounts in is worth real money, and the right order depends on the state.

New York applies the same treatment whenever you withdraw, so the order is a federal question rather than a state one — with the exception that the marginal rate is 5.4%, and a year of unusually high withdrawals pays that on the excess.

Smoothing withdrawals across years therefore beats lumping them, modestly. Take a large one-off distribution in a single year and it climbs the bracket schedule; spread the same amount over three and more of it stays low.

Required minimum distributions overrule all of this from 73 onward. Once they begin you must take the calculated amount whether the order suits you or not, which is the argument for drawing down or converting the pre-tax balance in the years before.

11. Or move across the state line

For most people the real alternative to New York is not Wyoming — it is the state on the other side of the line, near the same family, the same doctors and the same weather.

Pennsylvania is the cheapest of the group at $6,465, $3,822 below New York. Whether that is worth a move is a question about your life rather than your spreadsheet — but it is the comparison worth running, because it is the one you could actually act on.

One thing this table cannot show is the county. Property tax is set locally, and the spread inside a single state is routinely wider than the gap between two neighbouring states. A border move to a cheaper state and an expensive county can leave you worse off.

12. If you are moving to New York from somewhere else

The eight most populous states people leave, measured against New York on the same three lines.

New York is cheaper than 1 of these eight. The move is not obviously about cost, on these lines.

A move is not free, and this table does not price it. Transaction costs on both houses run to several per cent of the sale price, and at typical values that is often more than the first two or three years of the saving.

New York charges a transfer tax on the purchase itself — 0.4%, customarily paid by the seller. On the state's $480,000 median home that is about $1,920, once, at the point of sale. Closing costs here run about 2% to 5% of the price — $9,600 to $24,000 on the median home, which is the real entry fee for the annual saving this article has been describing.

13. What New York does not exempt you from

The federal system, entirely. This is the commonest misunderstanding about state retirement taxation, and it is worth stating plainly.

Required minimum distributions still apply. The amount is federal — your prior-year balance divided by an IRS life expectancy factor — and identical in all fifty states. A state changes what the distribution costs you, not whether you must take it.

Social Security is still federally taxable, on the federal provisional-income calculation, whatever your state does with it.

IRMAA still applies, with its two-year lag. A large conversion or distribution raises a Medicare premium two years later regardless of address.

And capital gains are still federally taxed. What New York adds on top is a separate question from what the federal system takes.

14. Establishing that you actually live here

Any state tax advantage is worth nothing until New York is your domicile, and the state you left may disagree about when that happened.

High-tax states audit departing residents. The question is not whether you own a home here; it is whether you genuinely abandoned the old domicile. Days spent in each state, voter registration, vehicle registration, where your doctors are and where you claim a homestead all bear on it.

The snowbird case is the risky one. Splitting the year between two states while keeping a home in both is exactly the profile a residency audit is built for. If a plan depends on the saving, count the days from the first year rather than reconstructing them afterwards.

15. Who New York actually suits

A military retiree, whose pension is exempt here while a private one is not.

Someone with a government pension, which this state treats better than a private one of the same size.

It suits an affluent retiree least. At the affluent profile the bill is $6,040, and whatever exclusion helps a modest income has stopped helping by then.

And it suits someone buying below the median, because $6,960 of property tax on the median home is the largest single line in this article.

16. What to check before you decide

Get your county's actual property tax rate, not the state average. Property tax is levied locally almost everywhere, and the spread inside a state is often wider than the spread between states.

Get a real insurance quote on a real address. $1,710 is the state average; construction, roof age and exposure move it a long way.

Work out your own income tax rather than using the profile above. $95,000 split one way is not $95,000 split another, and in New York the mix between Social Security and distributions changes the answer.

And check what your current state actually charges you before assuming it is worse. On these three lines the ranking surprises people in both directions.

Frequently asked questions

Does New York tax Social Security? No. New York does not tax Social Security benefits. The federally taxable portion carried into federal AGI is subtracted in full on the New York return, with no income threshold, no age condition, and no phase-out. Railroad Retirement Board benefits are treated the same way.

Does New York tax 401(k) or IRA withdrawals? the $20,000 figure is per taxpayer, not per return, and that distinction is the reason the married-joint entry reads $40,000 rather than $20,000. New York's pension and annuity income exclusion lets each individual who was 59 1/2 before the start of the tax year subtract up to $20,000 of qualifying pension and annuity income — including 401(k), 403(b) and traditional IRA distributions — from federal AGI. On a joint return where both spouses are 59 1/2 and both have their own qualifying income, each subtracts up to $20,000 against their own income, for $40,000 combined. A joint return where only one spouse has retirement income gets $20,000, not $40,000: the exclusions are not transferable between spouses.

What about pensions — private, government, or military? A $50,000 pension costs $1,023 if private, $0 if a government pension, and $0 if military retired pay. Those differences are the state's own policy, not an accident of the arithmetic.

What does retiring in New York actually cost? Income tax of $1,617 on the typical profile, plus about $6,960 of property tax and $1,710 of insurance on the median home — $10,287, which is 38th of 50.

Is New York a cheap state to retire in? On these three lines it ranks 38th of 50. Whether that makes it cheap for you depends far more on the house than on the tax code.

What does a Roth conversion cost in New York? An extra $2,712 in state tax on $50,000 converted, and $5,662 on $100,000. That is 5.4% of the amount converted, on top of the federal tax.

Does part-time work get taxed differently from my 401(k) withdrawals? $20,000 of part-time earnings costs $1,080 in state tax, an effective 5.4%.

Would a neighbouring state be cheaper than New York? Pennsylvania is the cheapest of New York and its neighbours at $6,465 against New York's $10,287.

Do required minimum distributions change if I move here? No. The required amount is a federal calculation and identical in every state. What changes is what the distribution costs once taken.

Does this article include local income tax? Some New York localities levy their own income tax on top of the state figure above — for example New York City (resident, top rate) 3.876%, New York City (resident, first bracket) 3.078%, Yonkers (nonresident earnings tax on wages) 0.5%. Rates vary by municipality, so this is not included in the total; check your own locality.

Will New York's treatment still apply in ten years? State legislatures revise retirement taxation regularly — several states have changed theirs in the past three years. Figures here are for tax year 2026 and are worth re-checking before a move.

What to do next

Two numbers decide this and neither is the one in the headline: your county's actual property tax rate, and a real insurance quote on a real address.

• Retirement state tax calculator — what any state charges on your income, cited per state
• RMD calculator — the distribution you must take, which no state changes
• Home insurance premium estimator — the line this article says decides it
• The Relocation Tax Playbook — establishing domicile, and the states that contest it