If you own a rental property in New York state, whether you lease it long term or list it on a short-term platform like Airbnb, understanding income tax rules is critical.
Rental income is taxable, but the way it’s reported, the deductions you can claim, and the rates you’ll pay depend on both state and local laws. Landlords who stay informed about their tax obligations can avoid costly surprises and maximize their investment returns.
This guide walks through the 2025 New York State income tax system, how rental income is treated, what deductions apply, and the special rules for New York City residents.
What counts as taxable rental income
New York landlords must report all rental income on their state tax returns. This includes rent payments, advance rent, lease-break fees, and non-cash arrangements such as services or improvements provided in exchange for rent. Short-term rental income from platforms like Airbnb or VRBO is also taxable, even if the booking site withholds fees.
The Internal Revenue Service and New York State treat this as ordinary income. Constructive receipt rules apply, meaning you must report income when it is made available to you—even if it technically applies to a future rental period. New York State personal income tax publications provide more detail.
New York State income tax rates in 2025
For the 2025 tax year, New York State continues to use a progressive system. Tax rates begin at 4% for the lowest income brackets and rise to a top rate of 10.9% for high earners. Landlords must add net rental income (gross rent minus allowable deductions) to their total taxable income, which determines their bracket.
Full rate tables are published by the New York State Department of Taxation and Finance. Make sure to check which bracket applies to your filing status—single, married filing jointly, or head of household.
New York City income tax
If you live in New York City, you must also pay a separate city income tax. The 2025 New York City income tax rate ranges from about 3.078% to 3.876%, depending on income level. These city taxes are in addition to state income taxes, creating one of the highest combined tax burdens in the country.
For landlords living in the city, this means net rental income is subject to both state and city taxes. More details are available on the NYC Department of Finance website.
Short-term rental considerations
If you earn income from short-term rentals, the tax rules are the same as for lease-based rent: all income must be reported. In addition, depending on where your property is located, you may also have to collect and remit sales or occupancy taxes. For example, New York State imposes sales tax on certain short-term stays, and some municipalities require an occupancy tax. Guidance is available from the New York State Department of Taxation and Finance.
Expenses unique to short-term rentals—such as cleaning services, supplies, and platform fees—can generally be deducted. Be sure to maintain detailed records, as short-term rentals are more likely to face scrutiny.
Deductions and tax planning for landlords
To reduce taxable rental income, landlords can deduct ordinary and necessary expenses such as mortgage interest, property taxes, landlord insurance, maintenance, utilities paid by the owner, and depreciation. Legal and accounting fees are also deductible.
However, personal expenses and improvements are not deductible. Loss deductions may also be limited if you rent to family members below market value. The IRS publication on residential rental property and the New York State rental income instructions provide detailed guidance.
Regional differences outside New York City
Outside New York City, landlords will not pay a local income tax, though they may face county or municipal lodging taxes for short-term rentals. Rules can vary widely. For example, some Hudson Valley counties impose occupancy taxes on Airbnb stays, while others do not. Always confirm with your local government before listing.
Nonresidents or part-year residents must file Form IT-203 if they earn rental income from New York property, even if they live elsewhere. Full-year residents use Form IT-201.
Read more: 5 hottest New York state rental markets for investors in 2025
Protecting your rental investment
Understanding your New York State income tax obligations helps you stay compliant and protect your bottom line. But tax planning is only one part of being a successful landlord. Every rental property carries risks—damage, liability, and loss of rental income—that can threaten your return on investment.
If you own or are planning to purchase a rental property in the Empire State, make sure your asset is protected with New York landlord insurance. The right coverage keeps your property, your income, and your long-term investment safe.
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