What a contribution saves in New York
The table shows three owners, each making the largest first-year contribution their age and income allow. New York's top rate is 10.9%, and how much a contribution saves depends on which brackets it comes out of.
| Owner | Contribution | Federal | New York | Total |
|---|---|---|---|---|
| Sole proprietor, 45, $250,000 profit, single | $156,000 | $32,700 | $9,300 | $41,900 |
| S corporation, 52, $250,000 salary and $250,000 profit, married | $223,000 | $50,800 | $14,700 | $65,500 |
| Sole proprietor, 58, $600,000 profit, married | $282,000 | $93,000 | $18,900 | $112,000 |
Savings are lower than the contribution times your top rate because a large contribution reaches down into lower brackets, and because for many owners it also reduces the 20% qualified business income deduction. Your own figures depend on your income, filing status and other deductions. The estimate works them out for you.
How New York treats the deduction
New York starts from federal income, so contributions that reduce your federal adjusted gross income generally reduce New York taxable income too. We have not confirmed every state's treatment line by line, so check with your tax adviser if the state saving matters to your decision.
A C corporation is taxed separately, and state corporate tax savings are not shown here.
New York City and Yonkers
New York City residents pay city income tax of 3.078% to 3.876% on top of state tax. City taxable income follows the state figure, so a contribution that lowers your New York income lowers city tax too. Yonkers residents pay a surcharge of 16.75% of state tax, which falls in proportion.
The examples above leave city tax out, so a New York City resident saves more than they show. The Metropolitan Commuter Transportation Mobility Tax on self-employment earnings is not reduced by plan contributions.
New York recaptures the benefit of its lower brackets from higher earners. The figures here do not model that, so they are approximate for incomes in the recapture ranges.
If you retire somewhere else
Money in a cash balance plan is taxed when it comes out, not when it goes in. Federal law stops a state from taxing retirement income paid from a qualified plan to someone who no longer lives there (4 U.S.C. 114). So the state you live in when you take the money out is the one that can tax it.
For someone who contributes while living in New York, where the top rate is 10.9%, and later retires in a state with lower or no income tax, that can make the state saving permanent rather than a deferral.
Deadlines are federal
The dates that matter are the same in every state: the plan can be adopted for 2026 up to your business's extended filing deadline, and corporations have to run the salary the plan counts through payroll by December 31. See cash balance plan deadlines or find your dates.