Owning a business in New York City or the surrounding state is an exciting—and competitive—venture. There are 2.3 million small businesses in the state of New York, accounting for 99.8% of all New York businesses and 48.1% of all New York employees, according to 2022 data from the Small Business Administration’s Office of Advocacy.
Small business taxes in New York can be complex, especially business taxes specific to New York City. Whether you’re an established business owner or an aspiring entrepreneur in the Empire State, it’s important to understand how to calculate small business taxes in New York City and beyond.
Below, we’re breaking down all the New York small business taxes you need to know, plus sharing details on when and how to pay them.
What kind of business taxes do you have to pay in New York?
The type of business taxes you pay in New York depend on your business entity. You might end up paying a corporation franchise tax, annual business filing fee, metropolitan commuter transportation mobility tax, pass-through entity tax, sales and use tax, withholding tax, or unemployment insurance taxes.
New York corporation tax
If your business is incorporated in New York state, you may have to file a New York state corporation tax return and pay a corporation franchise tax to the state. Franchise taxes are taxes you pay for the privilege of doing business in the state.
C corporations, S corporations, and Limited Liability Companies (LLCs) that elect C corp status all have to pay New York corporation franchise taxes. General partnerships, Limited Liability Partnerships (LLPs), standard LLCs, and sole proprietorships don’t have to pay corporation franchise taxes.
The amount of New York corporation tax you pay is based on three bases:
- Business income: This base is the equivalent of federal taxable income (modified for items of income and deduction that New York treats differently) minus investment income and other exempt income. You can see the current tax rates here. Most businesses fall into the “general business taxpayers” category, which means they end up paying a corporation tax rate of 6.5% of their gross business income.
- Business capital: This base is the total business capital apportioned to New York State after deducting short-term and long-term liabilities attributable to assets. You can see the current tax rates here.
- Fixed dollar minimum: This base is determined by your New York state receipts. You can see the different tax amounts here according to receipt totals.
You’ll end up paying the amount that’s the greatest out of the three bases above. However, if you’re an S corp, you just pay the fixed dollar minimum tax based on your gross receipts.
MTA surcharge for businesses in New York City
You might also be subject to the metropolitan transportation business tax (also called the MTA surcharge) if you operate in New York City and its surrounding areas. The MTA surcharge applies to you if your C corp does business, owns or leases property, employs capital, maintains an office, or gets receipts from business activity in the Metropolitan Commuter Transportation District (MCTD).
The MCTD includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island), Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.
Keep in mind that S corps don’t have to pay the MTA surcharge.
How to pay New York corporation tax
If you owe New York corporation tax, you need to file Form CT-3, the General Business Corporation Franchise Tax Return, to the New York Department of Taxation and Finance. Most corporations are required to file their returns electronically, which you can do here.
If you operate on a calendar year, your return is due on or before April 15; if you operate on a fiscal year, your return is due three and a half months after the end of the reporting period.
You also have to pay estimated quarterly taxes if you expect to owe more than $1,000 in franchise taxes after credits. You can pay estimated taxes by submitting Form CT-400, Estimated Tax for Corporations, to the Corporation Tax Web File portal.
New York annual business filing fee
If you operate a standard LLC, LLP, or general partnership, you have to pay an annual New York business filing fee. The filing fee amount is based on your New York gross income for the preceding tax year. If you don’t have any New York gross income for the preceding tax year, your filing fee is $25.
Otherwise, your fees are as follows according to your income:
For LLCs and LLPs
| If your gross income is between… | Your filing fee is |
| $0 – $100,000 | $25 |
| $101,000 – $250,000 | $50 |
| $250,001 – $500,000 | $175 |
| $500,001 – $1,000,000 | $500 |
| $1,000,001 – $5,000,000 | $1,500 |
| $5,000,001 – $25,000,000 | $3,000 |
| $25,000,001 + | $4,500 |
For regular partnerships
| If your gross income is… | Your filing fee is |
| $1,000,000 | $500 |
| If your gross income is between… | Your filing fee is |
| $1,000,001 – $5,000,000 | $1,500 |
| $5,000,001 – $25,000,000 | $3,000 |
| $25,000,001 + | $4,500 |
How to pay the New York annual business filing fee
If you owe an annual filing fee, you have to file Form IT-204-LL, the Partnership, Limited Liability Company, and Limited Liability Partnership Filing Fee Payment Form. The deadline is on or before the 15th day of the third month following the close of the tax year. You can submit the form and pay the fee at Tax.NY.gov.
New York City Metropolitan Commuter Transportation Mobility Tax
If you operate your business within New York City (as opposed to elsewhere in the state), you’re subject to a tax called the metropolitan commuter transportation mobility tax (MCTMT).
Not to be confused with the MTA surcharge, the MCTMT is imposed on certain employers and self-employed individuals who do business within the MCTD. You have to pay the MCTMT if you meet the following two conditions:
- You’re required to withhold New York state income tax from wages and
- your payroll expense for employees in the MCTD exceeds $312,500 in any calendar quarter.
To calculate how much MCTMT you owe, you need to know which MCTD zone you operate in. Zone 1 includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, and Richmond (Staten Island). Zone 2 includes the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.
The amount of MCTMT you pay is the sum of:
- Your payroll expense in the calendar quarter for all covered employees in Zone 1 multiplied by the applicable MCTMT rate from Table 1 below, or
- Your payroll expense in the calendar quarter for all covered employees in Zone 2 multiplied by the applicable MCTMT rate from Table 2 below.
Table 1
| Zone 1 payroll expense between… | MCTMT rate |
| $0 – $375,000 | 0.11% |
| $376,000 – $437,500 | 0.23% |
| $437,501 + | 0.60% |
Table 2
| Zone 2 payroll expense between… | MCTMT rate |
| $0 – $375,000 | 0.11% |
| $376,000 – $437,500 | 0.23% |
| $437,501 + | 0.34% |
How to pay New York City MCTMT
You need to file an MCTMT return using Form MTA-305 and make payments on a quarterly basis. Q1 payments are due April 30, Q2 payments are due July 31, Q3 payments are due October 31, and Q4 payments are due January 31. You can file and pay electronically by creating an account here.
New York pass-through entity tax
New York has an optional pass-through entity tax (PTET) that eligible partnerships and S corps can elect to take. If you take the PTET, your members and shareholders may be eligible for a PTET credit on their New York state income tax returns. Single-member LLCs, sole proprietorships, trusts, non-profit corporations, and C corps aren’t eligible to take the PTET.
You can elect the PTET between January 1 and March 15 by logging into or creating an online services account with the New York Department of Taxation and Finance.
The amount of PTET due depends on your business entity. You can calculate your New York PTET taxable income using the instructions here. Once you know your PTE taxable income, you can see how much PTET is due with this chart:
| If your PTE taxable income is between… | PTET due is |
| $0 – $2,000,000 | 6.85% of PTE taxable income |
| $2,000,001 – $5,000,000 | $137,000 plus 9.65% of the excess of PTE taxable income greater than $2 million |
| $5,000,001 – $25,000,000 | $426,500 plus 10.30% of the excess of PTE taxable income greater than $5 million |
| $25,000,001 + | $2,486,500 plus 10.90% of the excess of PTE taxable income greater than $25 million |
How to pay New York pass-through entity tax
If you opt into the New York PTET, you need to file an annual return on or before March 15. You can file online here. You also have to make estimated quarterly payments on or before March 15, June 15, September 15, and December 15 in the calendar year prior to the year in which the due date of the return falls.
Each quarterly payment should be an amount equal to at least 25% of the required annual payment for the taxable year. The required annual payment is the lesser of:
- 90% of the PTET shown on the return of the electing entity for the taxable year; or
- 100% of the PTET shown on the return of the electing entity for the preceding taxable year.
New York City pass-through entity tax
The New York City pass-through entity tax (NYC PTET) is an optional tax eligible city partnerships and city S corps can elect to take. Like the New York state (NYS) PTET, the NYC PTET gives the partners, members, and shareholders of electing entities credit on their New York state income tax returns.
If you want to make the NYC PTET election, you have to opt in on your online account between January 1 and March 15. If you opt into the NYC PTET, you have to make the election together with the NYS PTET.
The amount of NYC PTET you pay depends on your business entity and how much PTE taxable income you have. You can calculate your NYC PTE taxable income using the instructions here. Once you know your NYC PTE taxable income, multiply it by 3.876% to get your total PTET due.
How to pay NYC PTET
If you owe NYC PTET, you have to file an annual return here on or before March 15. You also have to make estimated quarterly payments on or before March 15, June 15, September 15, and December 15 in the calendar year prior to the year in which the due date of the return falls.
Each quarterly payment should be an amount equal to at least 25% of the required annual payment for the taxable year. The required annual payment is the lesser of:
- 90% of the NYC PTET shown on the return of the electing entity for the taxable year; or
- 100% of the NYC PTET shown on the return of the electing entity for the preceding taxable year.
New York state sales and use tax
The state of New York also imposes sales and use tax on businesses. Sales tax applies to retail sales of certain tangible personal property and services, whereas use tax applies if you buy tangible personal property and services outside the state and use them within New York.
The sales tax rate is the state rate of 4% plus whatever local tax cities or counties impose. You can search your jurisdiction by address here. There’s also an additional sales tax rate of 0.375% that applies to any sales made within the MCTD.
How to pay New York state sales and use tax
If you’re registered to pay New York sales and use tax, you have to file sales and use tax returns (and make payments) on either an annual, quarterly, or monthly basis. You can gather the appropriate sales tax forms here and file online here.
The deadlines for monthly, annual, and quarterly filers are listed on the New York Department of Taxation and Finance’s annual tax calendar.
New York withholding tax
If you have employees, you’re required to withhold and pay personal income taxes on wages, salaries, bonuses, commissions, and other similar income paid to employees. The amount of withholding tax you pay is based on your business’s address and employees’ withholding amounts. You can use Publication NYS-50-T-NYS to view withholding tables and calculate your tax amount.
How to pay New York withholding tax
You need to file a quarterly withholding tax return and make payments. Most businesses can use Form NYS-45, the Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return, to file electronically, but you can gather other withholding tax forms here.
The Q1 deadline is April 30, Q2 is July 31, Q3 is October 31, and Q4 is January 31.
Need help determining withholdings for your employees? Check out Gusto’s New York Salary Paycheck and Payroll Calculator.
New York unemployment insurance taxes
If you have employees, you have to register with the New York State Department of Labor and pay unemployment insurance taxes. This money goes to New York workers who qualify for unemployment assistance.
The tax rate depends on a few factors, including your business experience, number of employees, and taxable payroll. For new employers, the tax rate is 3.4%.
How to pay New York unemployment insurance taxes
You have to file the Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return (Form NYS-45) every quarter and make payments on the same dates: April 30, July 31, October 31, and January 31. You can learn how to Web File here.
Want to see how New York’s unemployment tax rate compares to other states? Here’s an updated list of unemployment tax rates for every state.
New York state income taxes
If your business is considered a disregarded entity for tax purposes (think: a single-member LLC or sole proprietorship), you don’t technically pay business taxes, but you’ll pay personal state income taxes on the income your business earns.
The tax rate can be anywhere from 4% to 10.9%, depending on which tax bracket you fall into.
If you’re a resident of New York City or Yonkers, you’ll also report your NYC or Yonkers resident income tax on your state tax return. If you’re self-employed, work in the MCTD, and your net earnings from the MCTD are over $50,000, you’ll also have to pay the MCTMT.
How to pay New York state income taxes
You have to file a New York state income tax return (see which specific form applies to you) and make payments online here. Many self-employed business owners also have to pay estimated taxes on a quarterly basis. You can see payment due dates and download estimated tax payment forms here.
New York business tax breakdown
Here’s a summary of New York business types and their federal and state tax obligations. Keep in mind that pass-through entities don’t pay federal income taxes.
| Business type | State income taxes | Annual business filing fee | MCTMT | Sales and use taxes | Unemployment insurance taxes | Pass-through entity tax | Federal taxes |
| C corporation | Yes, corporation franchise tax | No | Yes, if in MCTD | Yes, if applicable | Yes, if you hire employees | No | Yes |
| S corporation | Yes, corporation franchise tax | No | Yes, if in MCTD | Yes, if applicable | Yes, if you hire employees | Yes, if elected | No |
| LLC with C corp election | Yes, corporation franchise tax | No | Yes, if in MCTD | Yes, if applicable | Yes, if you hire employees | No | Yes |
| LLC | No | Yes | Yes, if in MCTD | Yes, if applicable | Yes, if you hire employees | Yes, if elected and filing as a partnership | No |
| Partnership | No | Yes | Yes, if in MCTD | Yes, if applicable | Yes, if you hire employees | Yes, if elected | No |
| LLP | No | Yes | Yes, if in MCTD | Yes, if applicable | Yes, if you hire employees | Yes, if elected | No |
| Sole prop | No | No | Yes, if in MCTD | Yes, if applicable | Yes, if you hire employees | No | No |
Get help filing your New York state business taxes with Gusto
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