Does New York tax Social Security and retirement income?
By Nicolas Straut
Key takeaways
- New York subtracts every dollar of Social Security your federal return taxes.1
- Pensions from New York State, local governments and the federal government are exempt at any age.
- From 59½, each person can exclude up to $20,000 a year of a private pension and IRA withdrawals.
In this article
- New York tax on retirement income, line by line
- How the $20,000 pension and annuity exclusion works
- What a 63-year-old drawing $34,000 from an IRA pays New York
- New York next to the states New Yorkers compare it with
- New York details to check for your return
- Use both exclusions before RMDs start
- New York retirement tax questions
Key takeaways
- New York subtracts every dollar of Social Security your federal return taxes.1
- Pensions from New York State, local governments and the federal government are exempt at any age.
- From 59½, each person can exclude up to $20,000 a year of a private pension and IRA withdrawals.
No, New York doesn't tax Social Security. A teacher's or civil servant's pension is exempt too, while a private pension and IRA withdrawals are taxed above a $20,000 exclusion per person from age 59½.
Which side of that line your income falls on decides almost the whole New York bill.
New York tax on retirement income, line by line
| Income | In New York | The rule |
|---|---|---|
| Social Security | Not taxed | New York does not tax Social Security. You subtract any benefits included in your federal adjusted gross income.1 |
| Pensions | Partly taxed | New York exempts New York State, local government and federal pensions at any age. A private pension is taxed, less the $20,000 pension and annuity exclusion once you are 59½.1 |
| IRA and 401(k) withdrawals | Partly taxed | New York counts IRA withdrawals toward the same $20,000 exclusion from age 59½, and taxes the rest as ordinary income.2 |
| Income tax rate | Graduated | Not confirmed on New York's site for 2026 |
How the $20,000 pension and annuity exclusion works
The exclusion follows the person, not the household, and it has three limits worth knowing before you plan withdrawals.
The exclusion is per person
Each spouse who is 59½ or older can exclude up to $20,000 of their own qualifying pension and IRA income, and the cap is $20,000 whatever the source.2
Turning 59½ during the year
If you turn 59½ during the year, only the amounts you receive after that date count toward the exclusion.1
Annuities you bought yourself
Payments from an annuity contract you bought with your own money do not qualify for the exclusion.2
What a 63-year-old drawing $34,000 from an IRA pays New York
Picture a single retiree, 63, who stopped working and lives on $20,000 of Social Security plus $34,000 of IRA withdrawals. The exclusion covers the first $20,000, and New York tax comes to $234.
| Step | Amount |
|---|---|
| Social Security | Not taxed |
| IRA withdrawals and pension | $34,000 |
| Retirement exclusion or subtraction | −$20,000 |
| Standard deduction2 | −$8,000 |
| Taxable income | $6,000 |
| New York tax owed | $234 |
Had the same income come from a New York State pension, the bill would be zero, since government pensions are subtracted in full. A married couple can shelter up to $40,000 when each spouse has qualifying income, which is why our sample couple owes only $154.
New York next to the states New Yorkers compare it with
Our married sample couple, both 67, owes $154 in New York. Massachusetts and Virginia are common comparisons, and Illinois exempts the same income outright.
| State | State tax on the sample couple |
|---|---|
| New York | $154 |
| Massachusetts | $2,490 |
| Virginia | $622 |
| Illinois | $0 |
| Every state we cover | |
New York details to check for your return
- New York's 2026 rate schedule, and New York City or Yonkers tax if you live there.
Use both exclusions before RMDs start
Taking about $20,000 a year from each spouse's IRA from 59½ uses the exclusion in years that would otherwise waste it. The Tweed Retirement Withdrawal Plan schedules withdrawals with New York tax counted, and the free Tweed Retirement Calculator projects the balance.
Once required minimum distributions begin, the RMD table for 2026 sets the smallest amount you must take. New York taxes whatever part of it runs past your exclusion.
New York exempts your benefit at any age you file, so the state never changes the answer the Tweed Social Security claiming plan gives on when to claim.
This year is free
Schedule IRA withdrawals with New York tax counted
New York retirement tax questions
Do all IRA withdrawals qualify for the New York exclusion?
No. The IT-201 instructions exclude IRA payments that come from contributions you made after you retired, so only the part from earlier contributions counts toward the exclusion.
Can a beneficiary use the New York exclusion on an inherited IRA or pension?
Yes, a beneficiary can claim the exclusion on an inherited IRA or pension. When several beneficiaries share one, the $20,000 limit is split among them, as the Department of Taxation's example for two beneficiaries shows.
Sources
- https://www.tax.ny.gov/pit/file/information_for_seniors.htm
- https://www.tax.ny.gov/forms/current-forms/it/it201i.htm
This page covers New York state income tax on retirement income for full-year residents in 2026. The households are illustrations, not your return.
Tweed provides educational information, not tax or financial advice. Nicolas Straut is a personal finance writer, not a financial advisor or tax preparer.
Personal finance writer, former Forbes contributor and This Week in Fintech writer. He isn't a financial advisor or a CPA.
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