New York is one of the more complicated places to be self-employed. On top of federal taxes, you may owe New York State income tax, New York City income tax, the city’s Unincorporated Business Tax, and a regional commuter transportation tax — depending on where you live and work. Here is how the layers fit together.
The layers
| Tax | Who owes it | Rate |
|---|---|---|
| Federal self-employment tax | Everyone with $400+ of self-employment earnings | 15.3% on 92.35% of profit |
| Federal income tax | Everyone | 10%–37% |
| New York State income tax | NY residents (and non-residents on NY-source income) | Progressive, up to 10.9% |
| New York City income tax | NYC residents | 3.078%–3.876% |
| NYC Unincorporated Business Tax (UBT) | Businesses carried on in NYC, above a gross income threshold | 4% (with a small-business credit) |
| MCTMT | Self-employed people in the MTA region above an earnings threshold | 0.34% or 0.60% |
New York State income tax
Your business profit is taxed by the state as ordinary income at progressive rates. Most freelancers with middle incomes fall in brackets around 5.5% to 6%, and a 2025 law trims the rates on taxable income up to $215,400 ($323,200 for joint filers) in two steps starting in 2026. Rates rise to 9.65% above about $1.08 million and up to 10.9% on income over $25 million. New York generally follows federal adjusted gross income, so business deductions you take on Schedule C reduce state tax too.
New York City income tax
If you live in one of the five boroughs, you also pay city income tax of 3.078% to 3.876% on your taxable income. It is collected on your New York State return, so there is no separate city income tax filing.
The Unincorporated Business Tax (UBT)
New York City taxes the net income of unincorporated businesses — including sole proprietors — that do business in the city, at 4%. Two features keep most small freelancers from paying much or anything:
- A UBT return is required only when your business’s total gross income is more than $95,000.
- A business tax credit eliminates the tax entirely when the UBT works out to a small amount and phases out as the tax grows. The city’s instructions have long set it to wipe out tax of $3,400 or less, phasing out by $5,400 — check the current year’s Form NYC-202 instructions for the exact figures.
NYC residents who pay UBT also get a partial credit for it against their city personal income tax. If your gross income is well above $95,000, this tax becomes real money; it is worth having a preparer look at it.
The MCTMT (Metropolitan Commuter Transportation Mobility Tax)
Self-employed people with business activity in the 12 counties of the Metropolitan Commuter Transportation District pay this tax once their net earnings from self-employment allocated to the district exceed a threshold. For 2026 that threshold rose to $150,000 (it was $50,000 through 2025), which removes most freelancers from it:
- Zone 1 — Manhattan, the Bronx, Brooklyn, Queens and Staten Island: 0.60% of net earnings allocated to the zone.
- Zone 2 — Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester counties: 0.34%.
The threshold applies to each person separately, even on a joint return. Older guides and some state publications still show the $50,000 figure.
Estimated payments
New York State estimated tax (which also covers NYC income tax and the MCTMT) is paid with Form IT-2105 on the same four dates as federal estimates: April 15, June 15 and September 15, 2026, and January 15, 2027. The UBT has its own estimated tax declaration when you expect to owe more than $3,400. Size your federal payments with the quarterly estimated tax calculator.
How much to set aside in New York
A New York City freelancer may face a combined state and city rate of roughly 9%–10% at middle incomes, on top of federal tax. In the tax set-aside calculator, enter your combined state and city rate in the state field. Outside the city, use your state rate alone.
Bottom line
- Everyone: federal SE tax, federal income tax and New York State income tax.
- Living in NYC: add city income tax.
- Doing business in NYC with gross income over $95,000: look at the UBT.
- Net self-employment earnings in the MTA region over $150,000: add the MCTMT.