Three layers of tax in New York: federal, state and city for Australians

At home you pay one income tax plus the Medicare levy. In New York City you pay three: federal, state and city, and the IRS wants to see your Australian bank balances too.

The short version

• If you live in one of the five boroughs, you pay federal income tax, New York State tax and New York City tax on the same income. Commuters who live outside the city don't pay the city layer [1][2].
• New York City's resident rates run from 3.078% to 3.876%, with the top rate kicking in above US$50,000 of taxable income for a single filer [2].
• New York calls you a resident if it's your home, or if you keep a flat here for substantially all of the year and spend 184 days or more in the state [1].
• Once you're a US tax resident, you report your Australian accounts on an FBAR if they add up to more than US$10,000 at any point in the year, and possibly on Form 8938 as well [4][5].
• The Australia–US tax treaty and foreign tax credits stop you paying full tax twice, but super is a grey area. Get advice from someone who knows both systems [6].

How the three layers stack

The US taxes income at several levels of government, each with its own return. Here's what a typical Australian on an E-3 in Brooklyn or Manhattan deals with.

The city rates haven't changed since 2017 [2]. For a single filer, 3.078% applies to the first US$12,000 of taxable income, then 3.762%, 3.819%, and 3.876% on everything over US$50,000 [2]. On a typical professional salary, nearly all your income is taxed at the top city rate.

The state's top rates are for millionaires: 9.65% above about US$1.08 million for a single filer, rising to 10.3% and 10.9% at higher levels [2]. Most salaried Australians land in the middle state brackets, which sit in the single digits.

Add it all up and a New York City resident on a good salary loses more to income tax than they would living across the Hudson in New Jersey, or out in Westchester. That's one reason some people choose Jersey City or Hoboken, though New Jersey has its own state tax and you'll still owe New York tax on wages earned working in New York.

There's a small credit

New York City residents get a fixed-amount NYC school tax credit. For single filers it's tiny: 0.171% of taxable income up to US$12,000, or US$21 plus 0.228% of the amount over US$12,000, for incomes up to US$500,000 [3]. Nice, but it won't cover many subway rides.

Are you a resident? Federal, state and city rules differ

Federal: the substantial presence test

The IRS counts days. You're a US tax resident for a calendar year if you're in the US for at least 31 days that year and 183 "weighted" days over three years: all your days this year, a third of last year's and a sixth of the year before [7]. Arrive on an E-3 in February and stay, and you'll almost certainly meet it in your first year.

Once you're a resident, the US taxes your worldwide income. That includes interest on your Aussie savings account, rent from your flat in Brisbane and dividends from your CommSec portfolio.

New York State and City: domicile or 184 days

New York uses two tests [1]:

1. Domicile. Is New York your permanent home, the place you intend to stay or come back to? You can have several homes but only one domicile, and changing it takes clear and convincing evidence [1].
2. Statutory residency. Even if your real home is elsewhere, you're a resident if you maintain a permanent place of abode in New York for substantially all of the year and spend 184 days or more there. Any part of a day counts [1].

The city uses the same rules [1]. A rented flat in Astoria counts as a permanent place of abode whether you own it or not [1].

If you're a resident for only part of the year, which is common in the year you arrive and the year you leave, you file as a part-year resident and your income is split between resident and non-resident periods [1].

Your Australian accounts: FBAR and FATCA

This is where Australians get caught. Two separate US reporting regimes apply to your accounts back home. Neither is a tax in itself, but the penalties for not filing can be serious.

FBAR (FinCEN Form 114)

You must file an FBAR if you have a financial interest in, or signing authority over, foreign financial accounts whose combined value was more than US$10,000 at any time during the calendar year [4]. A couple of Australian bank accounts, an offset account and a share trading account will easily pass that.

• It's due 15 April, with an automatic extension to 15 October [4]
• It's filed electronically through FinCEN's BSA E-Filing System, not with your tax return [4]
• Civil and criminal penalties can apply [4]

Form 8938 (FATCA)

Form 8938 is a second, overlapping report attached to your federal return. For an unmarried taxpayer living in the US, you file if your specified foreign financial assets are worth more than US$50,000 on the last day of the year or more than US$75,000 at any time in the year. For a married couple filing jointly it's US$100,000 and US$150,000 [5].

Your Australian bank already knows about this. Under FATCA, Australian banks report accounts held by US tax residents to the ATO, which passes the information to the IRS. So assume the IRS can see your accounts.

Super, the tax treaty and the ATO

The treaty

Australia and the United States have had an income tax treaty since 1982, amended by a 2001 protocol [6]. It decides which country gets to tax which income first, and it caps withholding on things like dividends and interest. In practice, you claim a credit in one country for tax paid in the other.

There's also a separate social security agreement. If you're sent to New York temporarily by an Australian employer, your employer can get a certificate of coverage from the ATO so you stay in the Australian system (super) and don't pay US Social Security tax [8]. If you're hired locally by a US employer, you pay into US Social Security like everyone else. The agreement also lets you combine Australian and US work periods to qualify for a partial US pension, once you have at least six US credits [8].

Superannuation: the grey area

The treaty doesn't give a clear, settled answer on how the US treats Australian super, and the IRS hasn't issued specific guidance. Practitioners take different views on whether earnings inside your fund are taxable each year, and whether super is reportable as a foreign trust. What's widely agreed:

• Contributions your Australian employer made before you moved aren't usually taxed again by the US just because you moved
• You should list your super balance in your FBAR and Form 8938 workings and discuss with your adviser whether it belongs on them
• Withdrawing super while you're a US tax resident can create a US tax bill even if it's tax-free in Australia

This is the single best reason to pay for a cross-border tax adviser in your first year. Our guide to super while living overseas covers the Australian side.

Don't forget the ATO

Moving to New York doesn't automatically end your Australian tax residency. If you're still an Australian resident, you lodge an Australian return on your worldwide income, including your US salary, and claim a foreign income tax offset for US tax paid. If you've become a non-resident, Australia generally taxes only your Australian-source income. Read our guide to Australian tax residency after you move before you lodge.

Your first-year checklist

The US tax year is the calendar year. Australia runs July to June. That mismatch means two different "first years" to sort out.

1. Get your SSN so your employer can withhold correctly. See our guide to the SSN and IDNYC.
2. Fill in your W-4 and IT-2104 at work. The IT-2104 sets your New York State and City withholding. Make sure your employer has your city address.
3. Write down your arrival date. It decides your federal residency start and your New York part-year period.
4. List every Australian account with its highest balance during the calendar year, in US dollars. You'll need it for the FBAR.
5. Decide your Australian residency status and tell your bank, so the right withholding applies to interest.
6. Lodge your Australian return for the year you left, by 31 October or through a tax agent.
7. File your US federal, state and city returns by 15 April the following year, plus your FBAR.
8. Keep records for both countries: payslips, W-2, PAYG summaries, bank statements and super statements.

Tax questions come up constantly in Cooee USA, our Facebook group for Australians in the USA. Members can't give you tax advice, but they'll tell you which questions to ask.

Sources

1. Determining residency status – New York State Department of Taxation and Finance
2. The NYC personal income tax before and after the pandemic – Office of the New York City Comptroller
3. Instructions for Form IT-201 (2025) – New York State Department of Taxation and Finance
4. Report of Foreign Bank and Financial Accounts (FBAR) – Internal Revenue Service
5. Comparison of Form 8938 and FBAR requirements – Internal Revenue Service
6. Australia tax treaty documents – Internal Revenue Service
7. Substantial presence test – Internal Revenue Service
8. US–Australia social security agreement – Social Security Administration

Keep reading

• Job hunting in New York: salary ranges, at-will jobs and benefits
• Leaving New York: breaking your lease and cutting NY tax ties
• Australian tax residency after you move
• Super while living overseas