New York nonresident income tax: Complete 2026 guide for expats and nonresidents
New York imposes income tax on nonresidents who earn income from New York sources – you pay tax only on the NY-source portion, not your worldwide income.
The state requires you to file Form IT-203 when your New York adjusted gross income exceeds the applicable filing threshold. Tax is calculated on your total income using the same graduated brackets as residents, then multiplied by the percentage of your income that comes from New York sources.
The following four key facts apply to nonresidents for tax year 2025:
- Form: Nonresidents file Form IT-203, the Nonresident and Part-Year Resident Income Tax Return
- Tax base: Only New York source income is taxable – wages earned in NY, NY business income, NY rental income, and gains from NY real property
- Rates: The same nine graduated brackets as residents apply, ranging from 4% to 10.9% for tax year 2025
- NYC tax: New York City income tax does not apply to nonresidents
Who is a New York nonresident for tax purposes?
New York uses two independent tests – domicile and statutory residency – to determine whether you are taxed as a resident or a nonresident.
A nonresident is someone whose domicile is outside New York AND who does not meet the statutory residency test. If you fail either test – that is, if your domicile is in New York or you qualify as a statutory resident – New York treats you as a resident and taxes your worldwide income.
- Domicile: The place you intend to be your permanent home. You can have only one domicile at a time, and New York considers it yours until you take clear steps to establish a new one elsewhere.
- Statutory residency: Even if your domicile is outside New York, you can be taxed as a resident if you maintain a permanent place of abode in NY and spend more than 183 days in the state during the tax year.
Both tests are defined under NY Tax Law Section 605.
The domicile test: Your permanent home and intent to return
Domicile is the place you intend to be your permanent home – the place you return to when you leave other locations. Changing it requires both physical presence in a new location and clear intent to abandon the old one.
New York auditors examine the following five factors when evaluating a domicile claim:
- Home: Where is your primary residence, and which home is larger, better-maintained, or more permanent?
- Active business involvement: Where do you conduct your primary business or employment activities?
- Time: How many days do you spend in New York versus your claimed domicile state or country?
- Near-and-dear items: Where do you keep items of personal significance – artwork, collections, family heirlooms?
- Family connections: Where do your spouse, children, and close family members live?
No single factor is determinative. New York evaluates all five together, and the burden of proof falls on the taxpayer claiming nonresident status.
The 183-day rule and statutory residency trap
Even if your domicile is outside New York, you can be taxed as a full-year resident if you maintain a permanent place of abode in the state and spend more than 183 days there.
Any part of a day in New York generally counts as a full day. Two narrow exceptions apply: days spent solely in transit between two points outside New York (for example, a layover where you never leave the airport) and days spent as a hospital inpatient for medical treatment. A flight that lands at JFK at 11:45 PM as your actual destination still counts as one day.
The 2014 New York Court of Appeals decision in Matter of Gaied narrowed the definition of “permanent place of abode” – the taxpayer must have a residential interest in the dwelling and actually use it as a residence, not merely own or maintain it.
A property kept solely for a family member’s use, where the taxpayer has no right to occupy it, may not qualify.
New York nonresident income tax filing requirements: Who must file Form IT-203?
You must file a New York nonresident income tax return using Form IT-203 if you have NY source income and meet any of the following conditions:
- You earned wages for services performed in New York
- You had income from a business, trade, or profession conducted in New York
- You received rental income from New York real property
- You received New York lottery or gambling winnings above the applicable threshold
- Your total New York adjusted gross income – the Federal amount column on Form IT-203, not just your New York-source income – exceeds the New York standard deduction for your filing status
Part-year residents – individuals who moved into or out of New York during the tax year – also file Form IT-203, but with a different income allocation method for the resident and nonresident portions of the year.
What counts as New York source income?
Nonresidents are taxed only on income with a direct connection to New York – if the income could have been earned without any tie to the state, it is generally not NY source income.
New York taxes for nonresidents apply only to income sourced to the state. The following categories count as NY source income:
- Wages and salaries: Compensation for services performed physically in New York, including days worked in a New York office
- Self-employment and business income: Net income from a trade, business, or profession conducted in New York
- Partnership and S-corp income: Your allocable share of income from a partnership or S-corporation doing business in New York
- Rental income: Net rental income from real property located in New York
- Gains from sale of NY real property: Capital gains from selling New York real estate
- Lottery and gambling winnings: New York State lottery prizes over $5,000, and gambling winnings over $5,000 from wagering transactions within New York State
Income from intangibles – such as interest, dividends, and capital gains on stocks – is generally not New York source income for nonresidents. This is one of the most important distinctions in the nonresident calculation.
See our TFX guide to rental property tax obligations for federal reporting requirements on US rental income.
New York nonresident income tax rates for tax year 2025
New York nonresidents do not pay a flat rate – they use the same graduated brackets as residents but pay only the proportional share attributable to New York source income.
The nonresident allocation method works in three steps: compute the tax on your total income as if you were a full-year resident, determine the New York income percentage – NY source income divided by total income – and multiply the computed tax by that percentage.
New York State income tax brackets for tax year 2025, single filers:
| Taxable income | Tax rate |
|---|---|
| $0–$8,500 | 4% |
| $8,501–$11,700 | 4.5% |
| $11,701–$13,900 | 5.25% |
| $13,901–$80,650 | 5.5% |
| $80,651–$215,400 | 6% |
| $215,401–$1,077,550 | 6.85% |
| $1,077,551–$5,000,000 | 9.65% |
| $5,000,001–$25,000,000 | 10.3% |
| $25,000,001 and above | 10.9% |
New York City income tax does not apply to nonresidents – only New York State tax is owed. Yonkers nonresidents who work in Yonkers may owe a separate Yonkers nonresident earnings tax (Form Y-203).
New York City income tax: Do nonresidents pay it?
New York City income tax applies only to NYC residents – nonresidents who work in the city but live elsewhere owe no NYC personal income tax.
The New York City income tax rate for nonresidents is zero. NYC imposes income tax at rates ranging from 3.078% to 3.876% on residents only.
The NYC Nonresident Earnings Tax – commonly called the commuter tax – was repealed in 1999 and has not been reinstated. Nonresidents working in NYC pay only New York State tax on their NY source wages.
The convenience of the employer rule and remote work taxation
Under New York’s convenience rule, a remote worker whose employer is based in New York may owe NY income tax on 100% of their wages even if they never set foot in the state.
New York treats days worked remotely outside the state as New York workdays unless the employee works remotely out of necessity for the employer – not personal convenience.
A business reason and a separate workspace are not enough on their own. New York’s “bona fide employer office” test requires either specialized facilities your employer’s New York office cannot provide, or at least four of six secondary factors (including a required home office, a documented business purpose, and reimbursed home-office costs) plus three of ten additional factors.
Based on a common TFX client scenario: A New Jersey resident works remotely for a Manhattan-based employer. The employee goes to the Manhattan office two days per week and works from home in New Jersey three days per week. Under the convenience rule, all five workdays are treated as New York workdays because the employee could work from the Manhattan office. New York source income is 100% of wages, not 40%.
The only way to reduce the allocation is to demonstrate that the remote days are worked from a bona fide employer office outside New York, established for the employer’s necessity.
New York State nonresident withholding tax: what employers must do
The following withholding obligations apply by entity type:
- Employers with NY-based employees: Must withhold NY State income tax on the NY-source portion of wages and report in W-2 Box 15/16
- Partnerships and LLCs: May be required to make estimated tax payments on behalf of nonresident partners or members using Form IT-2658, unless the entity elected the Pass-Through Entity Tax (PTET) for the year, in which case PTET estimated payments apply instead
- S-corporations: Must make estimated tax payments on behalf of nonresident shareholders using Form IT-2658 if the entity has NY-source income allocable to those shareholders, unless the entity elected the PTET for the year, in which case PTET estimated payments apply instead
See our TFX guide to foreign withholding forms for the federal layer of withholding that applies alongside state obligations.
New York nonresident real estate tax: Selling property in New York State
Nonresidents who sell New York real property must pay estimated withholding at closing using Form IT-2663.
A nonresident selling property in New York State owes taxes on the gain at closing. The closing agent or buyer withholds the estimated NY tax and remits it to the state. You then reconcile the actual tax owed on your IT-203 and claim a refund or pay the balance.
The following three steps apply:
- Calculate the gain. Determine the sale price minus adjusted basis – purchase price plus capital improvements and closing costs.
- Complete Form IT-2663. The Nonresident Real Property Estimated Income Tax Payment Form computes the estimated tax on the gain and must be submitted to the county recording officer with the deed.
- Reconcile on IT-203. When you file your annual New York nonresident return, report the sale and credit the IT-2663 estimated payment against your actual liability.
Foreign nationals selling NY real property face a second layer: federal FIRPTA withholding, generally 15% of the amount realized – though the rate drops to 10% for sales between $300,001 and $1,000,000 where the buyer will use the property as a residence, and no FIRPTA withholding applies at all to qualifying residential sales of $300,000 or less. The NY and federal withholding are separate obligations.
See our TFX guide to nonresident capital gains tax for the federal FIRPTA rules.
New York State tax for nonresident aliens: Special considerations
Nonresident aliens – foreign nationals who do not meet the substantial presence test or green card test – who earn New York source income must file both a federal Form 1040-NR and a New York IT-203.
Tax treaty benefits that reduce federal withholding do not automatically apply at the state level. New York conforms to some federal treaty provisions but not all, and taxpayers should verify treaty applicability for NY purposes on a provision-by-provision basis.
See our TFX guide to filing as a dual-status alien for the federal Form 1040-NR filing process.
New York State tax for nonresident military members
Under the federal Servicemembers Civil Relief Act, active-duty military members do not establish domicile in New York solely by being stationed there. Their military pay is not subject to NY income tax if their domicile is another state.
The following two rules apply:
- Servicemember rule: Military pay earned by an active-duty member stationed in New York is exempt from NY income tax if the member’s domicile is another state. Non-military income earned in NY – such as a part-time job or rental property – remains taxable.
- Spouse rule: Under the Military Spouses Residency Relief Act, a military spouse may also be exempt from NY income tax on wages if they share the servicemember’s domicile state and are in New York solely to be with the stationed service member.
Part-year resident vs. nonresident: Which status applies to you?
A part-year resident is taxed as a resident for the portion of the year they lived in New York and as a nonresident for the remainder – both statuses use Form IT-203 but with different income allocation methods.
If you moved into or out of New York during the tax year, you are a part-year resident. If you never lived in New York but earned NY source income, you are a nonresident.
| Part-year resident | Nonresident | |
|---|---|---|
| Definition | Lived in NY for part of the tax year | Never lived in NY but earned NY source income |
| Income taxed | All income during the resident period; NY source income during the nonresident period | Only NY source income for the full year |
| Form filed | IT-203 | IT-203 |
| Allocation method | Split-year allocation based on dates of residency change | NY income percentage applied to total income tax |
New York resident vs nonresident tax rates: Side-by-side comparison
The key difference is not the tax rate – both residents and nonresidents use the same NY graduated brackets – but the scope of income subject to tax.
| Tax status | Income taxed | NYC tax applies | Form filed | Allocation method |
|---|---|---|---|---|
| Full-year resident | All income from all sources | Yes, if NYC resident | IT-201 | None – all income taxable |
| Part-year resident | All income during resident period; NY source income during nonresident period | Only during NYC resident period | IT-203 | Split-year allocation |
| Nonresident | NY source income only | No | IT-203 | NY income percentage fraction |
The nonresident allocation fraction is: NY source income divided by total federal income. This fraction is applied to the tax computed on total income to produce the actual NY tax owed.
How to file Form IT-203: Step-by-step overview
The New York State nonresident tax form IT-203 follows a six-step process.
The following six steps walk through the IT-203 filing process:
- Gather W-2s and 1099s showing NY source income. Identify all income attributable to New York – wages with NY in Box 15, partnership K-1s with NY allocations, and 1099s for NY rental or real property sales.
- Calculate total income and NY source income. Enter your total federal adjusted gross income and the portion sourced to New York.
- Compute the NY income percentage. Divide your NY source income by your total income. This fraction determines how much of your computed tax is actually owed to New York.
- Apply the graduated tax rates to total income. Compute the tax as if you were a full-year resident, then multiply by the NY income percentage from step 3.
- Subtract credits and prepayments. Deduct any credits, estimated tax payments, and withholding shown on your W-2 and IT-2663 forms.
- File by April 15, or June 15 if you qualify for the automatic out-of-country extension. The IT-203 is generally due by April 15 of the year following the tax year. If you qualify for the federal automatic two-month extension because you’re outside the United States and Puerto Rico on the due date, New York extends your filing deadline to June 15 too, with no form required. Beyond that, New York requires its own separate extension – Form IT-370 – even if you already have a federal extension.
Nonresident New York tax forms may also include Form IT-203-A (Business Allocation Schedule) for allocating business income when a business’s books don’t clearly reflect New York-source income, Schedule A of Form IT-203-B for allocating wage and salary income earned partly in and partly out of New York, and Form IT-2663 for real property sales.
New York nonresident estate tax for foreign nationals
New York State imposes its own estate tax on real and tangible property located in New York owned by nonresident decedents, including foreign nationals.
At the federal level, the US estate tax exemption for nonresident aliens is limited to a $13,000 unified credit – equivalent to roughly $60,000 in situs assets – far lower than the $13+ million exemption available to US citizens and residents. This means a foreign national with even a modest New York apartment may face federal estate tax exposure.
New York’s estate tax applies separately to the NY-situs portion of the estate, with its own exemption threshold. Foreign investors in NY real estate face two layers of estate tax – federal under Form 706-NA and state under the NY estate tax return.
Safe harbor provisions and avoiding New York residency audits
New York aggressively audits high-income individuals who claim nonresident status. If you changed domicile from New York, maintain contemporaneous records to substantiate your claim.
The state offers a safe harbor: individuals who (1) maintain no permanent place of abode in New York at any time during the year, (2) maintain a permanent place of abode outside New York for the entire year, and (3) spend 30 days or fewer in New York during the year are treated as nonresidents, even if their domicile is New York.
The following five documentation best practices reduce audit risk:
- Keep a contemporaneous travel log showing every day spent in and out of New York
- Retain credit card and bank statements that corroborate your physical location
- Save cell phone records and E-ZPass or toll records
- Update your driver’s license, voter registration, and vehicle registration to your new domicile state
- File a change-of-domicile declaration with your new state if one is available
Foreign earned income exclusion and New York State nonresident income tax: What expats need to know
New York conforms to the federal foreign earned income exclusion (FEIE) – income excluded on Form 2555 is not added back when computing New York taxable income.
US expats who lived in New York before moving abroad and still have NY source income – such as rental income or deferred compensation – remain subject to New York nonresident tax on that income regardless of the FEIE. The exclusion only removes foreign earned income from the computation, not NY-source income.
For example, an expat who excludes $130,000 of foreign earned income for tax year 2025 does not add it back into the New York computation. But the New York income percentage is NY-source income divided by total federal income, so shrinking total income while NY-source income stays the same generally raises that percentage, not lowers it.
The tax computed on the smaller total income is itself lower, so the net effect on the final New York State nonresident income tax bill depends on the bracket structure, not a guaranteed reduction.
See our TFX guide to the foreign earned income exclusion for the federal FEIE rules.
Frequently asked questions
Yes, if your NY source wages exceed the filing threshold, you must file Form IT-203 regardless of how few days you worked in the state. Even one day of work in New York creates NY source income.
No. NYC personal income tax applies only to NYC residents. Nonresidents who work in the city owe only New York State tax on their NY source wages. The commuter tax was repealed in 1999.
It is a New York rule that treats days worked remotely as NY workdays if the remote arrangement is for the employee’s convenience rather than a necessity of the employer. It can result in 100% of wages being taxed by New York even if the employee works from home in another state.
You must complete Form IT-2663 at closing. The county recording officer collects estimated NY tax on the gain. You then reconcile the actual tax owed on your IT-203 and claim any overpayment as a refund.
Yes, New York generally conforms to the FEIE. Income excluded on your federal Form 2555 is not added back for New York purposes. However, if you have NY source income, that income remains taxable regardless of the FEIE.
No. Under the Servicemembers Civil Relief Act, active-duty members do not establish NY domicile by being stationed there. Their military pay is exempt from NY tax if their domicile is another state.
A part-year resident lived in New York for part of the year and is taxed as a resident for that period. A nonresident never lived in New York but earned NY source income and is taxed only on that income. Both file Form IT-203.
The same rules apply. If you earn NY source income – such as wages, rental income, or gains from NY real property – New York taxes that income regardless of where you live. You file IT-203 and compute the NY income percentage the same way as a domestic nonresident.
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