Introduction
New York has some of the highest taxes in the nation, but that doesn't mean you can't take steps to reduce your burden. Here are 10 completely legal strategies to lower your NY tax bill.
1. Maximize Your 401(k) Contributions
The simplest way to reduce both federal and NY taxes is contributing to a traditional 401(k). Every dollar you contribute reduces your taxable income for both federal AND state taxes.
2. Contribute to NY's 529 Plan
NY offers a state tax deduction for 529 plan contributions - up to $5,000 for single filers and $10,000 for married filing jointly.
3. Use an HSA (Health Savings Account)
If you have a high-deductible health plan, HSAs offer triple tax benefits.
4. Itemize Deductions When Beneficial
While the standard deduction works for most, some NY taxpayers benefit from itemizing.
5. Time Your Income and Deductions
If your income varies year to year, consider deferring bonuses to lower-income years.
6. Consider Municipal Bonds
Interest from NY municipal bonds is exempt from federal, NY State, and NYC income tax.
7. Work from Home Tax Strategies
If you're self-employed, the home office deduction can significantly reduce your taxes.
8. Maximize Business Deductions
For self-employed NYers: business travel, professional development, equipment all reduce taxes.
9. Plan for Capital Gains
NY taxes capital gains as ordinary income. Consider tax-loss harvesting.
10. Review Your Filing Status
Make sure you're using the optimal filing status.
Use our NY tax calculator to see how these strategies affect your specific situation.