How New York Taxes Social Security and Retirement Income
Understand what you’ll actually pay in taxes on Social Security, 401ks, IRAs and more.
Article published: October 09, 2025
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If you’re nearing retirement and thinking about settling in New York, there’s one question that’s likely top of mind: How much of my retirement income will go to taxes? It’s a fair concern – especially in a state known for its cost of living as much as it is for its charm.
Let’s start with the silver lining: New York does not tax Social Security benefits. But that’s just one piece of the puzzle. The rest of your retirement income – from IRAs, 401ks, pensions and investments – may be taxed, depending on how much you have and how it’s structured.
Understanding how New York treats different income streams can help you plan more effectively, potentially reduce unnecessary taxes and make the most of your retirement savings.
SOCIAL SECURITY
Let’s review the good news first. If Social Security will make up a significant part of your retirement income, you’ll be relieved to know that New York fully exempts these benefits from state income taxes.
That includes:
- Retirement benefits
- Disability benefits
- Survivor benefits
- Supplemental Security Income
Not every state is as generous and a number still tax some or all Social Security income. But New York joins the majority of states that leave these benefits untouched at the state level – a meaningful perk for many retirees.
RETIREMENT INCOME BEYOND SOCIAL SECURITY: WHAT GETS TAXED?
While Social Security is off the table, most other forms of income in retirement are subject to New York’s state income tax. These include:
- Traditional IRA and 401k withdrawals
- Private pension income
- Annuities (excluding the return of principal)
- Capital gains, dividends and interest
- Part-time employment or consulting income
- Rental or business income
However, the state provides some relief for retirees aged 59 ½ and older. You may be eligible to exclude up to $20,000 per person of distributions from certain types of retirement plans from your New York taxable income each year. That means a couple could potentially shield up to $40,000 annually – a valuable benefit, especially for middle-income retirees.
There’s even better news for public-sector retirees. Pensions from New York State and local governments, the federal government and military service are fully exempt from state income tax. So, while New York does tax many retirement income sources, strategic planning and available exemptions can help reduce your state-level burden.
NEW YORK’S TAX STRUCTURE
New York’s state income tax ranges from 4% to 10.9%, depending on your income. While the top rate applies only to ultra-high earners – those making over $25 million – even middle-income retirees may face a significant tax burden when you factor in:
- Local income taxes, such as New York City’s additional 3.08%
- High property values, which can lead to larger tax bills
- Sales tax, which starts at 4% statewide but can climb up to 8.75% with local add-ons
While New York offers plenty of advantages for retirees, the layered tax structure can take a toll, which makes strategic planning all the more important.
FEDERAL TAXES ON SOCIAL SECURITY
Although New York exempts Social Security income, the IRS does not – at least not entirely.
The federal government uses something called provisional income to determine how much of your Social Security is taxable. This will include:
- Your adjusted gross income
- Any tax-free interest (like from municipal bonds)
- 50% of your Social Security benefits
Depending on your filing status and income level, up to 85% of your Social Security benefits may be taxable at ordinary income rates at the federal level.
FEDERAL TAXATION THRESHOLDS FOR SOCIAL SECURITY
Single Filers | Married Filing Jointly |
$25,000–$34,000: Up to 50% taxable | $32,000–$44,000: Up to 50% taxable |
Over $34,000: Up to 85% taxable |
If you also draw income from a 401k, traditional IRA or other taxable sources, you’ll likely see a portion of your Social Security taxed federally, even if New York leaves it alone.
STRATEGIES TO HELP REDUCE YOUR TAX BURDEN IN RETIREMENT
1. Delay Taking Social Security
Waiting to collect your benefits can increase your monthly payout and give you time to withdraw other income (like from IRAs) while potentially staying in lower tax brackets.
2. Time Your Withdrawals Wisely
Coordinating withdrawals carefully across taxable, tax-deferred and Roth accounts can help you avoid triggering higher tax brackets or Medicare premium surcharges.
3. Leverage Qualified Charitable Distributions
Once you’re aged 70 ½, you can direct up to $100,000 annually from an IRA to a qualified charity. QCDs count toward your Required Minimum Distributions but don’t count as taxable income – a win-win for retirees who give.
4. Consider Roth Conversions
Before RMDs begin at age 73 or 75 (depending on your birth year), you may benefit from converting part of a traditional IRA to a Roth. You’ll pay taxes now, but reduce your future taxable income and the amount of Social Security that’s taxed down the road.
PLANNING A SNOWBIRD RETIREMENT? KNOW NEW YORK’S RESIDENCY RULES
Thinking of splitting time between New York and a warmer, lower-tax state? Be careful. New York has some of the strictest residency rules in the country.
- Spend more than 184 days in the state
- Maintain a permanent home in New York
- Retain local ties like a driver’s license, voter registration or New York-based advisors
If you want to change your residency, you’ll need to do more than spend winters in Florida – it involves updating legal documents, tracking your time and clearly severing ties to New York.
RETIRE SMARTER IN NEW YORK
New York may not be the most tax-friendly state for retirees, but with the right retirement strategy, you can help avoid unnecessary tax surprises and keep more of what you've worked so hard to save.
At Edelman Financial Engines, our experienced advisors can help you:
- Build a personalized, tax-smart withdrawal plan
- Decide when to claim Social Security for maximum benefit
- Coordinate federal and state tax strategies
- Manage RMDs efficiently
- Weigh the value of Roth conversions and QCDs
Whether you're planning to stay in the Empire State or considering a move, we’ll help you align your retirement income with your financial planning goals and reduce tax exposure where it counts.
This material was prepared for educational purposes only. Although the information has been gathered from sources believed to be reliable, we do not guarantee its accuracy or completeness.
Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from your qualified tax and/or legal professionals to help determine the best options for your particular circumstances.
Decisions regarding Social Security are highly personal and depend on a number of factors such as your health and family longevity, whether you plan to work in retirement, whether you have other income sources as well as your anticipated future financial needs and obligations.
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