New York no tax on tips calculator from 2026
New York adopted a state subtraction in its 2026 budget: from tax year 2026, up to $25,000 of tips you deduct federally also comes off New York AGI. Tipped wages stay the same on January 1, 2027 because an inflation off-ramp was triggered.
Tax Law § 612(c)(48)
Governor Hochul proposed the measure on January 1, 2026; it was enacted as Part B of Chapter 59 of 2026 (S.9009-C), signed May 28, 2026. The new paragraph subtracts “an amount of up to twenty-five thousand dollars to the extent allowed as a federal deduction pursuant to section two hundred twenty-four,” starting with 2026 — nothing for 2025. Because New York City and Yonkers resident taxes are computed from New York AGI, the subtraction reaches them too. New York’s 2026 rates run from 3.9% to 10.9%; most tipped workers sit in the 5.4% bracket.
New York figures
| Food service workers — NYC, Long Island & Westchester | $11.35 / $17.00 |
|---|---|
| Service employees — NYC, Long Island & Westchester | $14.15 / $17.00 |
| Food service workers — rest of state | $10.70 / $16.00 |
| Service employees — rest of state | $13.30 / $16.00 |
| In force | July 1, 2026 – December 31, 2027 |
| Next change | after December 31, 2027 — not yet published |
| Tipped threshold | Hospitality employers only; service-employee tip thresholds apply |
| Tips on the 2025 return | tips stay taxable in this state. New York’s subtraction starts with 2026; for 2025 the federal deduction does not reach New York AGI. Source: New York State Legislature |
| Tips on the 2026 return | state allows the federal tips amount. Chapter 59 of 2026, Part B adds Tax Law § 612(c)(48): a subtraction of “up to twenty-five thousand dollars to the extent allowed as a federal deduction pursuant to section two hundred twenty-four.” Source: New York State Legislature |
Two tipped rates, two regions
Only hospitality employers may take a tip credit. Downstate (New York City, Long Island and Westchester) the minimum is $17.00, with a $11.35 cash wage for food service workers and $14.15 for service employees; upstate it is $16.00, $10.70 and $13.30. The Department of Labor confirmed these rates continue on January 1, 2027, while home care aides rise to $20.00 and $19.00.
A Manhattan bartender
$26,000 of tips are capped at $25,000: $3,000 saved federally and about $1,350 on the state return at 5.4%, before any city tax saving. As a food service worker paid $11.35 for 32 hours ($363) with $220 of tips, pay clears $544.
Check a New York workweek (region and job type)
Where these figures come from
- New York State Department of Taxation and Finance · New York State Department of Labor
- Chapter 59 of 2026 (S.9009-C), Part B — Tax Law § 612(c)(48) (2026-05-28)
- New York Tax Law § 601 (2026)
- Minimum Wages for Tipped Employees (table by state) (2026-07-01)
- Your New York State Minimum Wage (2026)
Federal rules: how the deduction works. Nearby: Vermont, Massachusetts, Connecticut, New Jersey, Pennsylvania.
Figures verified against primary sources on