Clear Money Guide
What this state guide covers
A quick view of the questions, practical details and source notes below.
Updated August 12, 2026. Quick answer: Yes, but with a $20,000 exclusion from age 59½. New York taxes conversion income at its regular graduated rates, about 4%-10.9%. The Tax Department answered this directly: the pension and annuity exclusion “applies to Roth IRA amounts, both to distribution income and to conversion income”, so a converter who is 59½ at the time of the conversion can exclude up to $20,000 per person — shared with other private pension and IRA income — while a converter under 59½ gets nothing.
Confidence note: high. New York’s own memorandum TSB-M-98(7)I states that the $20,000 exclusion applies to conversion income and sets the age-59½ condition, so this is not an inference from the general pension rule.
Why a conversion is a different question from a withdrawal
Almost every state summary answers “how does New York tax retirement income?” That is a question about distributions. A Roth conversion is not a distribution in the ordinary sense — it is a voluntary election to recognise income now in exchange for tax-free growth later. Whether a state’s retirement exclusion reaches that election is a separate question, and it is the one that decides your bill.
New York is one of the few states that has answered this in writing rather than leaving it to inference, and the answer is a number with an age on it: $20,000 per person from 59½, nothing before. The exclusion is shared with your other private pension and IRA income, so a year of large withdrawals leaves less of it for the conversion.
The timing consequence is unusually sharp here. Converting shortly before 59½ and shortly after can differ by the tax on $20,000, and if you reach 59½ during the year the department’s own rule prorates the exclusion by days.
What New York does with the converted amount
State income tax: graduated, ~4% to 10.9% top rate (top 10.9% bracket in effect through 2027; FY2026 budget cut middle-class bracket rates slightly starting 2026)
How New York treats IRA and plan income: Private pensions, annuities, IRA and 401(k) distributions taxable, but taxpayers age 59 1/2+ may exclude up to $20,000/person per year (Tax Law § 612(c)(3-a)). unchanged for 2026. NYS/local government, federal civil service pensions fully exempt (§ 612(c)(3)).
New York answered this one directly, and the answer is $20,000.
The Tax Department has said the pension and annuity exclusion applies to conversion income, so a converter who has reached 59 1/2 can exclude up to $20,000 per person, shared with other private pension and IRA income. Below that age there is nothing, and the balance is taxed at rates reaching 10.9%. Where you sit against both lines is worth confirming.
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What to ask a preparer about New York
Will I be 59½ at the time of the conversion, and how much of the $20,000 exclusion will my other pension and IRA income already have used?
Converting around a move
Converting in the year you move into New York is the case that catches people. Residency at the moment of conversion is what generally determines which state gets to tax it, so a conversion executed a week before a move and one executed a week after can produce different bills.
Four separate taxes change when you move, not one: income tax on withdrawals, treatment of Social Security, estate tax, and inheritance tax. A state that looks good on conversions can be worse on the other three.
The state bill is the smaller half
Whatever New York does, the conversion is federal ordinary income first. The federal bracket you land in, and whether the conversion pushes you over an IRMAA threshold two years later, will usually move more money than the state line does. The state answer tells you whether to convert here; the federal answer tells you how much to convert at once.
Paying the tax from outside the account matters more than either. Using converted dollars to pay the bill shrinks the balance that was the entire point of converting.
Sources
Authority: N.Y. Tax Law § 612(c)(3) and (3-a); NY Dept. of Taxation & Finance pension exclusion guidance (Pub 36 / IT-201 line 29); N.Y. Tax Law sec. 952; N.Y. Tax Law sec. 951(a).
Compiled from state statutes, session laws and revenue-department publications and adversarially verified in July 2026. Dataset confidence for New York: high.
This page states what the cited authority says. It is not tax advice, and a conversion large enough to matter is worth putting in front of a preparer who can see your whole return.
Nearby states
An exclusion that starts at an age turns the size of a conversion into a timing question as well as a tax one. The Roth conversion state tax calculator takes the exclusion you have available this year, applies your rate to whatever the conversion exceeds it by, and shows the state bill next to the federal one so you can see which half is doing the damage.