Updated October 5, 2026. Quick answer: Yes. New York starts from federal adjusted gross income, so dividends and interest are taxed on the graduated schedule, which for 2025 runs from 4% on the first slice to 10.9% on taxable income over $25,000,000. The instructions add “bonds and obligations from states other than New York State or its” political subdivisions and subtract U.S. government bond interest.
How New York treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxed as part of federal adjusted gross income on the graduated schedule |
| 2025 rates | 4% on the first slice of taxable income (the top of that slice is $8,500 or $17,150 depending on filing status) up to 10.9% on income over $25,000,000 |
| Other states’ municipal bonds | Added on line 20 (code EA-113), including “interest and dividend income from tax-exempt bond mutual” |
| U.S. government bonds | “Line 28: Interest income on U.S. government bonds”, subtracted |
| Mutual fund dividends | Funds that “meet the 50% asset requirement each quarter qualify for” the subtraction |
A $20,000 example
Dividends and interest of $20,000 taxed wholly at the lowest 2025 rate, 4%, would add $800; at the top rate, 10.9%, $2,180. 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 document read, and they print no 2026 rates.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether New York taxes capital gains, whether New York taxes pensions, how New York taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- Instructions for Form IT-201 (2025): 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.