New York's 2026 tax year brings a modest rate cut for most filers, a bigger child credit, relief for many self-employed people from the MCTMT, and higher rates for top earners locked in for years.

Here's what changed in New York for 2026 returns (filed in 2027), and what to do about it.

Lower rates for most filers

New York's budget cut income tax rates for the five lowest brackets in two steps, part in 2026 and the rest in 2027. The state estimates most filers will see a reduction. The savings are modest per household, but they apply automatically through withholding and on your return.

Higher rates for top earners extended

The higher rates on New York's top brackets, originally scheduled to expire after 2027, were extended through 2032. High earners who were planning around a rate drop should revisit those plans, including the timing of income and the value of the pass-through entity tax.

A bigger Empire State Child Credit

For 2026, the Empire State Child Credit is $1,000 for each child under age 4 and $500 for each child ages 4 through 16, a substantial increase for families with young children.

MCTMT relief for the self-employed

Starting in 2026, self-employed individuals generally owe the Metropolitan Commuter Transportation Mobility Tax only when their net earnings allocated to the MCTD (New York City and the surrounding counties, including Rockland and Westchester) exceed $150,000, up from $50,000. Many consultants and small business owners who paid it in prior years won't owe it for 2026.

PTET still matters

Federal law now allows a larger state and local tax deduction ($40,400 for 2026), but it phases down for higher incomes. For many owners of partnerships and S corporations, New York's pass-through entity tax still produces meaningful federal savings. The election for 2027 must be made by March 15, 2027.

Estate tax threshold

The New York estate tax exclusion is $7.35 million for 2026, versus $15 million federally, with the "cliff" that eliminates the exclusion for estates more than 5% over it. See New York estate tax.

What to do now

  • Check your withholding and estimated payments against the new rates.
  • If you're self-employed in the MCTD, recheck whether you'll owe the MCTMT for 2026.
  • Business owners: decide on the 2027 PTET election before March 15.
  • If you're planning a move out of New York, read up on residency audits first.

Working with a licensed New York CPA who knows these rules is the easiest way to make sure they're applied correctly.