Conformity status as of May 2026: New York State has NOT adopted the federal OBBBA tip exemption. Tips are fully taxable at NY State and NYC rates. The federal exemption still applies — it just doesn't reduce your New York tax.

Updated May 2026 · 8 min read

Does New York Tax Tips in 2026?

Yes. New York taxes all tip income as ordinary income and has not conformed to the OBBBA. NYC tipped workers face the state income tax plus an additional city income tax — four separate tax obligations in total. The federal OBBBA exemption still saves you on your federal return; it just does nothing for your New York return.

The Full Tax Stack on Tips in New York

Tax LayerWho PaysRate on TipsOBBBA Reduces This?
Federal income taxAll NY workers10–22%Yes — first $25k exempt
FICAAll NY workers7.65%No
NY State income taxAll NY workers4.0%–10.9%No — not conformed
NYC city income taxNYC residents only3.078%–3.876%No

NY State rates are marginal bracket rates for 2026. Effective rate at typical server income is lower than the top bracket. NYC rates apply to residents; non-residents working in NYC pay a 3.44% earnings tax instead.

State Tax Rate: What New York Charges on Tip Income

New York uses graduated brackets. These are the applicable NY State marginal rates for single filers at typical tipped worker income levels in 2026:

NY Taxable IncomeNY State RateNotes
$0 – $17,1504.0%Lowest bracket
$17,150 – $23,6004.5%—
$23,600 – $27,9005.25%—
$27,900 – $161,5505.85%Most tipped workers fall here
$161,550 – $323,2006.25%—

NY State brackets for single filers, 2026. Most tipped workers with moderate to high tip income will have an effective state rate in the 5%–6% range. Source: NY Department of Taxation and Finance.

NYC vs. Upstate: The City Tax Difference on Tips

The NYC city income tax applies only to NYC residents and non-residents earning income within the five boroughs. The rate difference is significant:

Worker SituationState Tax on TipsCity Tax on TipsTotal State+City Rate
NYC resident4.0%–5.85%3.078%–3.876%~7–10% combined
Non-resident working in NYCHome state rate3.44% (NY non-resident earnings tax)Varies
Upstate NY (Albany, Rochester, Buffalo)4.0%–5.85%$0 — no city tax4–6% state only

NYC income tax rates for 2026 single filers. Source: NYC Department of Finance.

NY vs. Neighboring States on Tip Tax Rates

StateState Tax Rate on TipsState Tax on $30k TipsOBBBA Conformed?
Florida No state tax0%$0N/A
Pennsylvania3.07% flat$921No
New Jersey~4.5% effective~$1,350No
New York State (upstate)~5.85% effective~$1,755No
New York City (resident)~9.5% combined~$2,850No
Connecticut~5.0% effective~$1,500No

Effective rates at ~$60,000 total income for single filers. Rates vary with income. NYC figure includes NY State + NYC city tax combined.

Calculate Your New York Take-Home

  1. Total gross = base wages + all tips
  2. Federal: OBBBA deduction up to $25,000 in qualified tips reduces federal AGI
  3. Apply $16,100 standard deduction (single, 2026) and 2026 federal brackets
  4. NY State: compute separately — tips are fully taxable, no OBBBA deduction applies
  5. NYC city tax (if resident): apply 3.078%–3.876% to all NY income including tips
  6. FICA: 7.65% on full gross income
Calculate Your New York Take-Home →

FAQs: Tips and Taxes in New York (2026)

Does New York State tax tip income in 2026?
Yes. New York has not conformed to the federal OBBBA tip exemption. All tip income is taxed as ordinary income at NY State rates (4.0%–10.9%). NYC residents pay an additional city income tax (3.078%–3.876%) on top.
What is the NYC income tax rate on tips?
NYC residents pay city income tax at rates from 3.078% to 3.876% on all income including tips. Non-residents who work in NYC pay a non-resident earnings tax of 3.44% on NYC-earned income. Neither rate provides any exemption for tip income.
Does the OBBBA federal exemption still apply to NYC workers?
Yes. NYC workers still get the federal OBBBA exemption — up to $25,000 in qualified tips is exempt from federal income tax. This saves on federal taxes only. The exemption does not apply to NY State or NYC income tax.
Is New York expected to conform to the OBBBA tip exemption?
As of May 2026, the New York State legislature has not passed conformity legislation. New York has historically decoupled from federal tax provisions that reduce state revenue. Conformity is possible but not confirmed — check NY DTF for updates before filing.
What is New York's tipped minimum wage in 2026?
NYC's minimum wage is $16.50/hr in 2026. The tipped minimum wage in NYC is $10.65/hr for food service workers — employers apply a $5.85 tip credit. If tips don't bring a worker to $16.50/hr, the employer pays the difference. Upstate NY: $15.00/hr full minimum, $12.50/hr tipped minimum.
How does upstate NY differ from NYC on tip taxes?
Upstate NY workers (Albany, Rochester, Buffalo, Syracuse) pay only NY State income tax — they are not subject to NYC city income tax. At the same income, upstate NY workers pay roughly 3.5%–3.9% less on tip income than NYC residents due to the absence of the city tax.
Can I deduct tips from my NY state taxes?
No. Without state conformity to OBBBA, tip income is fully taxable for NY State and NYC purposes. The federal deduction does not flow through to your NY state return.

Compare: Florida ($0) · Illinois (4.95%) · Pennsylvania (3.07%) · All 50 states →