Nearly two-thirds of New York State’s tax receipts are now generated by the personal income tax, or PIT. As a result, the state is very heavily reliant on highest-earning 1 percent of New York taxpayers—whose effective income tax rates have increased sharply under the new federal tax law capping state and local tax (SALT) deductions.
In light of the SALT cap and of proposals to extend or further increase the state’s so-called “millionaire tax,” this paper presents charts and tables highlighting notable trends in state PIT data. Key points with a bearing on the income tax debate include the following:
- New York’s fastest-growing group of high-income taxpayers consists of nonresidents, who have minimal exposure to the millionaire tax.
- The percentage of New York residents and New York source income among all the U.S. income millionaires declined in the first six years after the state millionaire tax was first imposed in 2009.
- The capital gains share of New York’s taxable income has rebounded to pre-recession levels, boosting the state’s reliance on the most volatile portion of the PIT base.
- The SALT deduction cap enacted as part of the federal Tax Cuts and Jobs Act will result in a higher Marginal Effective Tax Rate for the highest-earning residents of New York City.
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