Updated October 4, 2026. Quick answer: Yes, with an exclusion. New York taxes 401(k) and IRA withdrawals but lets a resident aged 59 and a half or older subtract up to $20,000 of qualifying private pension and IRA income. The IT-201 instructions say a filer “may not take a pension and annuity income exclusion that exceeds $20,000”.
State retirement-income forms, line by line: New York IT-201 pension exclusion.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: New York tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does New York tax 403(b) and 457(b) withdrawals.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: New York tax withholding on IRA and 401(k) withdrawals.
Taking money out of your TSP? How the state taxes it, from its own tax documents: Does New York tax TSP withdrawals?.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does New York have an inheritance tax?.
What New York does with 401(k) and IRA withdrawals
The exclusion does not cover amounts derived from contributions made after retirement, and each spouse claims it for their own income.
| Item | What the documents say |
|---|---|
| Treatment | Taxable, with a pension and annuity income exclusion |
| Exclusion | Up to $20,000 per person at 59½ or older, for non-government pension and IRA income |
| State rates | 4% to 10.9% on the 2025 schedule; 3.90% to 10.9% on the 2026 estimated-tax schedule |
| Source | New York Department of Taxation and Finance, IT-201 and IT-2105 instructions |
A $40,000 withdrawal
Of a $40,000 withdrawal, up to $20,000 can be excluded, leaving $20,000 (computed as $40,000 minus $20,000) in New York income if all of it qualifies. The instructions list “periodic and lump-sum payments from an IRA” among the qualifying payments.
Conditions that decide the answer
- Qualifying income includes “periodic and lump-sum payments from an IRA”, but not payments derived from contributions made after you retired.
- The exclusion is claimed on income received at 59½ or older, up to $20,000 per person.
Single-filer rate schedule
Breakpoints are in dollars, as the instructions print them. The first five brackets are lower on the 2026 estimated-tax schedule; the breakpoints are the same.
| Taxable income, in dollars | 2025 rate | 2026 rate |
|---|---|---|
| 0 to 8,500 | 4% | 3.90% |
| 8,500 to 11,700 | 4.5% | 4.40% |
| 11,700 to 13,900 | 5.25% | 5.15% |
| 13,900 to 80,650 | 5.5% | 5.40% |
| 80,650 to 215,400 | 6% | 5.90% |
| 215,400 to 1,077,550 | 6.85% | 6.85% |
| 1,077,550 to 5,000,000 | 9.65% | 9.65% |
| 5,000,000 to 25,000,000 | 10.3% | 10.3% |
| Over 25,000,000 | 10.9% | 10.9% |
What changes in 2026
The Department’s 2026 estimated-tax schedule prints lower rates in the first five brackets (3.90% to 5.90%, against 4% to 6% for 2025). The top rate stays 10.9%.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether New York taxes pensions, how New York taxes retirement income, whether New York taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- Instructions for Form IT-201, Full-Year Resident Income Tax Return (Tax Year 2025): https://www.tax.ny.gov/pdf/current_forms/it/it201i.pdf
- Instructions for Form IT-2105, Estimated Income Tax Payment Voucher for Individuals (Tax Year 2026): https://www.tax.ny.gov/pdf/current_forms/it/it2105i.pdf
Sources: the primary documents linked above, read on October 4, 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.