New York State's Absurd Effective Marginal Rates

I know this topic was touched on here a few years ago, but with NYS's higher income rates for 2023, I thought I might present an actual case to illustrate the importance of managing annual income for taxpayers who have some control over timing.

Consider this example of a New York State tax resident:

Filing Status: Single

AGI: $1,220, 383

Standard Deduction: $8,000

TI: $1,212,383

NYS Income Tax: $116, 995, which is an effective tax rate of 9.65% on all income. At first, I thought TurboTax's calculation could not be right, but reviewing the NYS tax computation tables more closely reveals that as soon as one's income exceeds the prior rate bracket by $50,000, all of your income gets taxed at the next highest marginal rate. That's pretty painful.

For example, the first $50,000 of AGI over $1,077,550 is taxed at a 60.34% marginal rate. Yikes!!

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