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New York taxes for delivery and rideshare drivers (2026)
New York can stack up to five taxes on one driver: state income tax, New York City or Yonkers income tax, the commuter mobility tax for big earners, and the New York City unincorporated business tax. For 2026 the state cut its lowest rates and, unlike for 2025, now lets you subtract tips on the state return, up to the federal $25,000 deduction.
Most drivers owe only the first two layers, so the sections below start there. Use the 1099 gig tax calculator with New York selected, then type the combined state and city rate from the example if you live in the five boroughs; the calculator's pre-filled figure is a single rounded state rate and does not know about the city tax.
Key numbers
| Item | What applies |
|---|---|
| State income tax | Yes. 3.9% on the first $8,500 rising to 10.9% over $25 million (2026, single) |
| Standard deduction (single) | $8,000 (2025 instructions; 2026 not yet posted) |
| Federal tips deduction | Followed from 2026 (Tax Law 612(c)(48)); not followed for 2025 |
| Estimated tax form | IT-2105, or ACH debit through the Tax Department's online services |
| Estimated tax trigger | $300 or more of state, city, or Yonkers tax after withholding and credits |
| New York City resident tax | 3.078% to 3.876% (2025 table), on the same taxable income |
| MCTMT | 0.60% (Zone 1) or 0.34% (Zone 2) of net earnings from self-employment over $150,000 |
| NYC unincorporated business tax | 4%, filing required above $95,000 of gross business income |
The state rates for 2026
The Tax Department revised its 2026 rate schedules to reflect the rate reductions in the 2025 state budget, and Tax Law section 601 now lists the single-filer bands below for taxable years beginning after 2025 and before 2027. Rates on the first five bands are a tenth of a point lower than for 2025.
| New York taxable income (single) | Rate |
|---|---|
| Up to $8,500 | 3.90% |
| $8,500 to $11,700 | 4.40% |
| $11,700 to $13,900 | 5.15% |
| $13,900 to $80,650 | 5.40% |
| $80,650 to $215,400 | 5.90% |
| $215,400 to $1,077,550 | 6.85% |
Higher bands run to 9.65%, 10.3%, and 10.9% above $1,077,550, $5 million, and $25 million. New York taxable income is federal AGI less the New York standard deduction, which was $8,000 for a single filer who is not a dependent in the 2025 instructions. We use that figure here because the 2026 instructions were not posted when we checked.
Five possible layers on one driver
| Layer | Who pays | Rate |
|---|---|---|
| New York State income tax | Residents, and nonresidents on New York-source income | 3.9% to 5.9% for typical driver incomes |
| New York City resident tax | Residents of the five boroughs | 3.078% to 3.876% |
| Yonkers | Residents (surcharge on state tax); nonresidents with Yonkers earnings (separate tax) | 16.75% of state tax for residents |
| MCTMT | Self-employed with more than $150,000 of earnings in the commuter district | 0.60% or 0.34% |
| NYC unincorporated business tax | Businesses in the city with more than $95,000 of gross income | 4%, with credits |
Worked example: a full-time driver living in Brooklyn
Gross income $61,000 with $7,200 of tips, 4,500 miles in the first half of the year and 5,000 in the second, and $1,500 of other expenses. The engine gives net profit $52,437.50, adjusted gross income $48,732.91, and a $7,200 federal tips deduction. New York taxable income is $33,532.91 after the $8,000 standard deduction and the new tips subtraction.
- New York State tax: $1,645.78
- New York City resident tax: $1,184.29
- Federal income tax: $2,193.56; self-employment tax: $7,409.18
- Total: $12,432.81, a set-aside of 20.4% of gross, or $3,108.20 a quarter
The tips subtraction is worth $663.77 on the state and city bills combined, compared with a 2025-style return that taxes every tip. The same driver living outside the city pays $1,645.78 of state tax and no city tax, a total of $11,248.52. That $1,184.29 gap is the price of the city layer.
What changed for tips
For 2025 the federal deduction sat below the line, so it never lowered New York's starting figure of federal AGI, and we found no New York subtraction to replace it. Ballotpedia's May 2026 count listed New York as not conforming. The Executive Budget's own explanation called this a design problem: the federal deduction "does not allow the benefit to flow through to the state level." The enacted 2026-27 budget fixed it with a subtraction of up to $25,000 "to the extent allowed as a federal deduction" under section 224 of the Internal Revenue Code, for taxable years beginning on or after January 1, 2026.
Because the subtraction follows the federal deduction, it carries the same conditions: the tips must meet the federal definition, which for 2026 means they are reported to you on a 1099. Our tips deduction guide lists those conditions. For a 2025 return, plan on New York taxing the tips.
Estimated payments on Form IT-2105
The Tax Department's instructions say you generally must pay estimated tax if you expect to owe at least $300 of New York State, New York City, or Yonkers tax for 2026 after subtracting withholding and credits. Payments are due April 15, June 15, September 15, and January 15, 2027, and you can pay by ACH debit from a bank account on the Department's website. To avoid the penalty, pay at least 90% of the 2026 tax or 100% of the 2025 tax, and 110% of 2025 if your NYAGI was over $150,000. As elsewhere, filing by January 31 and paying in full removes the January payment. Federal rules are in the quarterly payment guide.
The unincorporated business tax trap
NYC's Department of Finance says an individual who carries on a business wholly or partly in the city and has total gross income from all business of more than $95,000, before deductions, must file an unincorporated business tax return. The rate is 4%, a $5,000 exemption applies, and a credit wipes out the tax for small amounts. The trap is the test: it uses gross income, not profit. A full-time driver with a high gross figure and modest profit may have a filing obligation even if the tax due is small. Ask the Department of Finance how your platform's reported payments should be counted, and see our deductions guide for expense records that keep profit accurate.
1099 forms
New York's 1099-K requirement follows the IRS's, with payers reporting to the state within 30 days of the federal filing. We found no lower state threshold. Read the 1099 thresholds guide for the federal rules.
General information for tax year 2026, not tax advice.
Pennsylvania and Ohio also add local taxes on top of the state's: see the Pennsylvania guide and the Ohio guide. Drivers who live across the Hudson can compare the New Jersey guide, where tips stay taxable.
Frequently asked questions
Does New York follow the federal no tax on tips deduction?
Starting with tax year 2026, yes. The 2026-27 state budget (Chapter 59 of the Laws of 2026) added paragraph 48 to Tax Law section 612(c), a New York adjusted gross income subtraction of up to $25,000 of tips, to the extent allowed as a federal deduction under section 224 of the Internal Revenue Code. For tax year 2025 we found no New York subtraction, and Ballotpedia listed New York as not conforming, so assume 2025 tips are taxable on the state return. Check the Tax Department's 2026 instructions for the exact form line when they are posted.
Do I owe New York City income tax if I live in the city?
Yes. New York City residents pay a city income tax on the same New York taxable income, at rates from 3.078% to 3.876% in the 2025 tax table, in addition to state tax. The city tax is filed on the same Form IT-201 as the state return. Nonresidents who drive in the city do not owe the resident tax.
What is the MCTMT and does it apply to me?
The Metropolitan Commuter Transportation Mobility Tax applies to self-employed people with net earnings from self-employment above $150,000 in the Metropolitan Commuter Transportation District for 2026. The rate is 0.60% in the five boroughs (Zone 1) and 0.34% in the surrounding counties (Zone 2). Most drivers are well below $150,000 of profit and do not owe it.
What is the NYC unincorporated business tax and who files it?
It is a separate 4% city tax on unincorporated businesses carried on wholly or partly in New York City. Per the NYC Department of Finance instructions you must file if your total gross income from all business is more than $95,000, measured before deductions. A $5,000 exemption and a business tax credit reduce the bill for smaller businesses, and a credit against your resident NYC income tax can follow. A driver with high gross receipts but modest profit can have a filing duty even though the tax is small.
When are New York estimated tax payments due?
April 15, June 15, September 15, and January 15 of the next year, on Form IT-2105 or by ACH debit through the Tax Department's online services. You generally need to pay if you expect to owe at least $300 of New York State, New York City, or Yonkers tax for 2026 after withholding and credits. If you file by January 31, 2027 and pay in full, the January payment is not required.
Is there a New York rule for 1099-K forms?
The Tax Department says New York's 1099-K reporting requirement follows the IRS requirement. Payers file with the state within 30 days of the federal filing. We found no lower New York threshold, but check each year because states do change these rules.
Sources
- New York State Tax Law, section 601 (rates for taxable years beginning after 2025 and before 2027); NY Tax Department, withholding tax rate changes (2026 rate schedules revised)
- NY Senate and Assembly, budget bill A10009 / S9009, Part B: Tax Law section 612(c)(48) tips subtraction, effective for taxable years beginning on or after January 1, 2026 (signed May 2026 as chapter 59)
- NY Tax Department, 2026-27 Executive Budget tax expenditure proposals: explanation of the tips proposal
- NY Tax Department, Instructions for Form IT-2105 (2026): $300 trigger, dates, safe harbors, MCTMT rates and $150,000 threshold, ACH payment
- NY Tax Department, 2025 Instructions for Form IT-201: standard deduction, New York City resident rates, Yonkers surcharge
- NYC Department of Finance, Instructions for Form NYC-202 (2022): $95,000 gross income test, 4% rate, $5,000 exemption and credit
- NY Tax Department, Reporting requirements for payments to merchants (1099-K)
- Ballotpedia, Nineteen states have conformed to the No Tax on Tips deduction (May 28, 2026; secondary source, used for the 2025 status only)
- IRS, What the "No Tax on Tips" deduction means for you; federal figures from our methodology page