NYC Unincorporated Business Tax in 2026: who pays and how much
A freelancer or single-member LLC working in New York City pays a city business tax on top of state and city income tax.
Total tax on this income in 2026
$21,469
Put aside 25% of each payment · $5,367 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| New York income tax | $3,669 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 25.3% |
With an S corp election and a $34,000 salary, about $3,099 less tax (check it).
Computed by Radif Partners from the New York City finance department, read on October 15, 2026 · How we calculate
New York City taxes the business income of sole proprietors, partnerships and LLCs that are not corporations at 4% through its Unincorporated Business Tax (UBT), on the share of income allocated to the city. Three rules keep most small freelancers out of it. A return is required only when total business gross income exceeds $95,000. A $5,000 exemption comes off net income before the rate applies. And a credit erases a tax of $3,400 or less entirely, shrinks one between $3,400 and $5,400, and disappears at $5,400. City residents also get a partial credit for UBT against their NYC personal income tax, which runs from 3.078% to 3.876% for 2026. Above $150,000 of self-employment earnings allocated to the city, the 0.6% MCTMT is added. The calculator above shows federal and New York State tax on your profit; the three city charges are explained below.
The UBT is how New York City taxes people who work for themselves. It applies to individuals and unincorporated entities, single-member LLCs included, that carry on a trade, business or profession wholly or partly in the city (NYC Department of Finance, UBT). An S corporation is outside it, because the city taxes S corporations under a different tax. For a freelancer, that means three city layers can stack: the UBT on the business, the resident income tax on the person, and the MCTMT on high self-employment earnings.
State income tax on a freelance profit
New York income tax
$3,920
| State share of profit | 4.4% |
| Total with federal | $23,236 |
From gross income to the UBT bill
Start with gross income, not profit. If total business gross income is $95,000 or less, no UBT return is required at all. Above that, the city taxes net business income allocated to New York City, less a $5,000 exemption, at 4%. The business tax credit then does most of the work for small practices: a UBT liability of $3,400 or less is fully credited, so nothing is paid; between $3,400 and $5,400 the credit shrinks as the tax grows; at $5,400 or more there is no credit. Before other adjustments, a 4% tax of $3,400 corresponds to about $90,000 of net business income, counting the $5,000 exemption, which is roughly where a solo consultant starts paying something.
A freelancer can therefore have to file without owing anything: gross receipts of $120,000 with $40,000 of expenses leave a net income whose tax falls under the full-credit line. Filing still matters, because the return is what claims the credit.
The resident income tax and the commuter tax
Living in the city adds a personal income tax computed with the New York State return, on the same taxable income. Its four rates run from 3.078% to 3.876%, with single-filer brackets starting at $12,000, $25,000 and $50,000 for 2026 (New York instructions IT-2105). City residents who paid UBT get a partial credit against this tax, so the two do not stack in full. Nonresidents who only work in the city do not pay it.
The Metropolitan Commuter Transportation Mobility Tax reaches self-employed people in New York City at 0.6% of net earnings from self-employment allocated to the city, but only when those earnings exceed $150,000. Below that line, nothing is due. The surrounding counties of the commuter district have a lower zone rate.
When the S election changes the city tax
New York City does not recognize the federal S election. An LLC that elects S corporation status leaves the UBT but becomes subject to the city's General Corporation Tax, at 8.85% of net income or a fixed minimum based on receipts (NYC Department of Finance, GCT). The owner's salary is then taxed as wages, and the city personal income tax still applies to residents. That is one reason the LLC vs S corp comparison often comes out differently in New York City than in the rest of the state.
The LLC itself also pays the state fees shown on the New York page, including the newspaper publication that New York requires within 120 days of formation. Other local taxes in the country are compared in the local business taxes guide.