Doing business in New York City: city taxes on top of state filings

The stack

• City corporate tax roughly mirrors the state base: model both, not one.
• UBT reaches sole proprietors, partnerships, and LLCs not taxed as corporations; an exemption and a sliding credit remove or reduce it for smaller businesses.
• Manhattan tenants south of 96th Street paying $250,000+ in annual rent owe commercial rent tax.

Corporations: BCT and GCT

C-corporations doing business in the city pay the NYC Business Corporation Tax at 8.85% of allocated income, with minimums similar in structure to the state’s. S-corporations, which the city does not recognize as pass-throughs, pay the General Corporation Tax at 8.85% instead. Both are filed with the NYC Department of Finance, separately from the state’s Form CT-3 or CT-3-S.

LLCs and partnerships: UBT

An LLC taxed as a partnership or disregarded entity, a partnership, or a sole proprietor carrying on business in the city pays the Unincorporated Business Tax at 4% of net income allocated to the city. A small exemption, and a credit that phases out as the tax rises, eliminate or reduce UBT for smaller businesses. Members still pay New York State and City personal income tax on their share if they are city residents.

Commercial rent tax

Businesses renting premises in Manhattan south of the center line of 96th Street owe the commercial rent tax once annual base rent reaches $250,000. The nominal rate is 6%, but a 35% base-rent reduction makes the effective rate 3.9%, and a sliding credit applies between $250,000 and $300,000.

Worked example

A Brooklyn design agency organized as an LLC with $400,000 of city-allocated net income pays UBT at 4% of its city-allocated income (less the exemption and any credit), while an otherwise identical C-corp in Manhattan pays 8.85% BCT plus New York State’s 6.5% and the MTA surcharge. Entity choice changes the city bill as much as the state one.

The state layer underneath

City taxes sit on top of state obligations, never instead of them. For the NY side, see New York Article 9-A, and check whether a hire or customer in New York City creates a filing duty in the nexus checker.