Capital Gains Taxes for NY and NYC Residents

Generating capital gains from the sale of investments?

Live in New York City? Read this first.

Capital gains taxes for New York residents can be tricky because New York State and New York City tax rates are blind to capital gain treatment. Capital gains are taxed at both the state and city level as ordinary income, unlike at the federal level where there is no preferential rate.

That means whether your gains are short-term or long-term, they’re going to be taxed as ordinary income both at the state and city level. Understanding how these taxes are calculated is crucial to maintaining tax compliance. 

Federal Tax Gains

Federal capital gains tax applies to all filers, regardless of where you live.

• Short term capital gains (assets held 1 year or less) are taxed using your ordinary income tax rates (10%-37%).
• Long-term capital gains (assets held over 1 year) benefit from preferential rates based on your income and filing status.

These are the rates and break points for long-term capital gains in 2025 at the federal level:

New York State vs New York City Capital Gains Tax

The biggest impact to your taxes will likely come from the New York element, which is residence based. Whether you live in NYC for an entire year or part of the year, you may owe NYC tax.

Capital gains are fully taxable at the state level, which differs largely from the federal level. Your gains taxes are going to be treated the same as wages or interest, and there’s no separate rate for short-term vs long-term gains. 

However, the NY component can only be managed by residency, as they tax capital gains as ordinary income.

Here are the rate schedules for NYS and NYC. Combined, you can quickly get into the 10+ % bracket.

Last Thing to Note

You can manage the federal portion of capital gains through careful timing and income planning. However, the state and city portion is determined by your residency and overall income, not how long you held the investment. It’s important to remember the differences when it gets close to tax season. You don’t want to be surprised by unexpected tax bills.