States / New York
NY state income tax · checked October 14, 2026
Does New York tax tips and overtime?
New York taxes overtime. Starting with 2026, it subtracts up to $25,000 of tips, to the extent you deduct them federally.
| New York return | Tips | Overtime |
|---|---|---|
| 2025 | Taxed | Taxed |
| 2026 | Not taxed (follows federal) | Taxed |
The details
New York starts from federal AGI, so neither deduction helped on 2025 New York returns.
The enacted 2026–27 budget (Part B) added a New York AGI subtraction of up to $25,000 of tips, to the extent allowed as a federal deduction under section 224, for taxable years beginning on or after January 1, 2026. Overtime didn’t get the same treatment and stays taxable.
The federal deductions apply either way. See who qualifies for no tax on tips, how the overtime deduction works, and where both go on Schedule 1-A.
States with the same 2026 treatment
All 50 states and D.C. · New Mexico · North Carolina
Questions
Does New York tax tips in 2026?
For 2026, New York doesn’t tax the qualified tips you deduct on your federal return.
Does New York tax overtime in 2026?
For 2026, New York taxes overtime in full.
What about my 2025 New York return?
For 2025, New York taxes tips in full. For 2025, New York taxes overtime in full.
Does the federal deduction still apply?
Yes. Whatever your state does, you can still claim the federal deductions on Schedule 1-A if you qualify: up to $25,000 of qualified tips per return and up to $12,500 of qualified overtime ($25,000 joint), phasing down above $150,000 of MAGI ($300,000 joint).