Opher Ganel published this piece on Medium, later carried by Wealthtender, on why high-earning New Yorkers overpay state income tax. New York's per-capita tax burden is $12,685, 78% above the national average, and the state and city each run their own systems on top of the federal code.
The biggest misconception I hear from high earners in New York is that their federal strategy handles everything. It does not. New York State and New York City run their own tax systems, with their own rates, deductions and rules about what counts. A client making $300,000 in Manhattan faces a combined marginal rate that can push past 50% when you stack federal, state and city. Most people do not realize they are living in one of the most expensive tax jurisdictions in the country until it has already cost them.
The practical fix is a localized strategy, not just a federal one. The state does not give the capital gains preference the federal code does, so timing matters more, not less. Restricted stock, deferred compensation and bonuses all have timing flexibility that most employees never use. Deferred comp elections, the year a bonus is paid, when RSUs are sold: each of those can be worth tens of thousands of dollars at New York rates.
If you earn in the city and your tax planning stops at the 1040, you are optimizing the smaller of your tax problems.
Read the full article at Medium →
