Does New York Tax Social Security or Pensions?

New York does not tax Social Security, and it generally lets you subtract New York State, local, and federal government pensions to the extent they are in your federal income. It also excludes up to $20,000 of qualified pension and annuity income.1 The government pension subtraction applies at any age, with a narrower rule for Optional Retirement Program members. The $20,000 exclusion is per taxpayer, for anyone who was 59 and a half or older for the entire tax year.1 So your New York retirement income tax bill depends on where your money comes from. What is left after tax is what pays for care.

In This Guide

• Does New York Tax Social Security? The Three Breaks
• How New York Taxes Social Security and Pensions
• The $20,000 Qualified Pension and Annuity Income Exclusion1
• Does the $20,000 Exclusion Cover IRA and 401(k) Withdrawals?
• What New York Retirement Income Tax Costs You
• New York Retirement Income Tax at a Glance
• Why This Matters for Care
• Frequently Asked Questions
• Next Steps

Does New York Tax Social Security? The Three Breaks

No. Social Security is the break people expect, and two more sit behind it.

New York treats retirement income with a layered system. Social Security comes off the top. Government pensions come off at any age. And qualified pension and annuity income gets an exclusion of up to $20,000 if you were 59 and a half or older for the entire tax year.1 Each break applies to a different kind of income, and they can combine.

The result is that two retirees with the same total income can owe very different amounts to New York. A retired teacher living on a government pension may owe the state almost nothing. A retiree living on a private-sector pension who was 59 and a half or older all year can exclude up to $20,000 of it and pays tax on the rest.1

How New York Taxes Social Security and Pensions

For most retirees, New York taxes neither of these two sources.

Social Security is exempt. New York does not tax Social Security benefits. They are subtracted from your federal adjusted gross income on the state return, so the entire benefit comes through free of state tax.1 Railroad retirees get similar treatment: Social Security equivalent Tier 1 railroad retirement benefits can be subtracted, and so can Tier 2 or supplemental annuity benefits under the Railroad Retirement Act of 1974 that federal law exempts from state income tax, using Form IT-225.1

Government pensions are subtracted at any age. If you receive a pension or other distribution from a New York State or local government plan or a federal government plan, you can subtract the amount included in your federal adjusted gross income, regardless of your age. The Tax Department lists the United States "including the military" among the employers whose pensions qualify.1 One exception: Optional Retirement Program members may subtract only the portion attributable to employment with the State or City University of New York or the State Education Department. A beneficiary of a deceased federal or New York government employee can take this subtraction too, on payments included in federal adjusted gross income.1

The New York State Department of Taxation and Finance administers these rules and publishes the senior-specific guidance. The distinction that matters: a government pension is subtracted at any age, while other pension and annuity income falls under the separate $20,000 exclusion covered next.1

The $20,000 Qualified Pension and Annuity Income Exclusion

Other retirement income gets its own break, and it has two conditions.

If you were at least 59 and a half for the entire tax year, New York lets you exclude up to $20,000 of qualified pension and annuity income.1 The exclusion is per taxpayer, so a married couple where both spouses receive pension income can exclude up to $20,000 each, whether they file jointly or separately. What a couple cannot do is share it: neither spouse may claim any unused part of the other's exclusion, so a couple where only one spouse has pension income gets one $20,000 exclusion between them, not two.1

Four things to keep straight:

• It is capped. The exclusion stops at $20,000 per person. Qualified pension and annuity income above that is taxed at New York's regular rates.1
• It has an age condition. If you were 59 and a half or older for the entire tax year, you may exclude up to the full $20,000.1 If you turned 59 and a half during the year, the exclusion covers only the pension and annuity income you received on or after that date, still up to $20,000.1
• Survivors have their own rules. Your own pension plus a late spouse's still tops out at $20,000 a year. A beneficiary can take the exclusion at any age, on payments included in federal adjusted gross income, if the deceased would have qualified had they lived (if the deceased would have turned 59 and a half that year, only payments from that date count). It is first reduced by any amount the deceased's own New York return subtracted for that year, split among multiple beneficiaries, and capped at $20,000 a year for the deceased and all beneficiaries combined.1
• Disability income shares the cap. If you also have income that qualifies for the disability income exclusion, the two exclusions combined cannot exceed $20,000.1

This is the break that does the heavy lifting for private-sector retirees. A retiree drawing $18,000 a year of qualified pension and annuity income may shield all of it. A retiree drawing $50,000 shields the first $20,000 and pays tax on the rest.1 Our guide to retirement accounts for care covers how to draw these accounts down when care costs enter the picture.

Does the $20,000 Exclusion Cover IRA and 401(k) Withdrawals?

Yes, within the department's definition. Its 2025 Form IT-201 instructions define qualified pension and annuity income to include periodic and lump-sum IRA payments and periodic 401(k) distributions, but not the part derived from contributions made after you retired. The list also covers periodic employee pension payments and some 457, 403(b), cafeteria plan, and Keogh (HR-10) payments, each on conditions the instructions spell out.1

Three things do not count: an annuity bought with your own money from an insurance company or other financial institution, payments received as a nonemployee spouse under a qualified domestic relations order or New York domestic relations order, and employer matching or nonelective contributions you designated to a Roth account under the SECURE 2.0 Act.1 If an account does not fit, ask the department or a tax preparer before planning around the exclusion.

What is not in doubt is the ceiling. Pension and annuity income that does not fall inside the $20,000 exclusion is taxed at New York's graduated rates.1

What New York Retirement Income Tax Costs You

After the exclusions, whatever retirement income is left runs through New York's graduated rate.

For tax years beginning in 2026, the state income tax climbs from 3.9 percent on the lowest bracket to 10.9 percent at the top.1 The rates apply to New York taxable income, the figure your state return arrives at after the exclusions above and anything else it subtracts. New York sets a separate 2026 schedule for each filing status, and the first bracket is a different size on each:

• Unmarried, or married filing separately: 3.9 percent on New York taxable income up to $8,500. The tax on that first $8,500 is $332.1
• Head of household: 3.9 percent up to $12,800. The tax on that first $12,800 is $499.1
• Married filing jointly, or a surviving spouse: 3.9 percent up to $17,150. The tax on that first $17,150 is $669.1

Higher brackets step up from there on every schedule, so check the full 2026 schedule for your filing status before estimating what you owe.

The 10.9 percent rate applies only to New York taxable income over $25,000,000.1

New York Retirement Income Tax at a Glance

Why This Matters for Care

State tax is not an abstraction when you are pricing assisted living or in-home help. It is money that leaves your budget before the care bill arrives.

Whatever New York leaves untaxed stays in the budget that has to cover care. A retiree who subtracts a government pension pays no New York tax on the amount subtracted. A retiree paying tax on pension and annuity income above the cap keeps less, and that gap belongs in the planning.

That is why the tax picture belongs in any honest funding plan. Our guide to building a senior care funding plan walks through how to map income, taxes, and care costs together, and the broader guide to paying for senior care covers Medicaid, VA benefits, and private-pay options once you know what your after-tax income actually is.

Next Steps

Sort your income into the three buckets first, then plan around it.

• Separate Social Security and government pensions. Subtract Social Security and New York State, local, and federal government pensions to the extent they are in your federal adjusted gross income.1 The New York State Department of Taxation and Finance page sets out each subtraction.
• Apply the $20,000 exclusion to other pension and annuity income. If you were 59 and a half or older for the entire tax year, shield up to $20,000 per person of qualified pension and annuity income, checking each IRA or 401(k) withdrawal against the 2025 Form IT-201 instructions.1
• Estimate tax on the rest. Use the 2026 schedule for your filing status, starting at 3.9 percent, on the New York taxable income left after the exclusions.1
• Build the after-tax number into your care budget. Use what you keep, not what you gross, when pricing care.

If retirement income alone will not cover care, the next question is what else can. Our guide to paying for senior care in New York covers the state's programs, and New York senior property tax relief covers the state's property tax breaks for older homeowners.

Learn More

Find personalized help mapping your New York retirement income against care costs at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.