Updated October 5, 2026. Quick answer: Yes, with a break. New York taxes annuity income in federal adjusted gross income on its graduated schedule, and a taxpayer who is 59½ or older can exclude up to $20,000 of qualifying pension and annuity income. The instructions say the exclusion does not cover “purchased with your own funds from an insurance company” or other financial institution.
State retirement-income forms, line by line: New York IT-201 pension exclusion.
How New York treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Part of New York adjusted gross income; up to $20,000 of qualifying pension and annuity income may be excluded at 59½ |
| Where claimed | Form IT-201, line 29 |
| Not qualifying | Distributions from an annuity contract bought with your own funds from an insurance company or other financial institution |
| 2025 rates | 4% on the first slice of taxable income up to 10.9% on income over $25,000,000 |
A $24,000 example
A qualifying plan annuity paying $24,000 a year, for a taxpayer 59½ or older, leaves $4,000 after the $20,000 exclusion. Taxed wholly at the lowest 2025 rate, 4%, that adds $160; at the top rate, 10.9%, $436.
An annuity bought with your own funds gets no exclusion: the full $24,000 taxed at 4% is $960, and at 10.9% is $2,616. Your own figure depends on the bracket your total income puts it in.
What changes in 2026
The 2025 instructions are the latest New York documents read, and they print no 2026 rates.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether New York taxes pensions, how New York taxes retirement income, annuity income tax by state, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- Instructions for Form IT-201, 2025 (New York State Department of Taxation and Finance): https://www.tax.ny.gov/pdf/current_forms/it/it201i.pdf
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.