Does New York Tax Pensions? A 2026 Guide for Retirees in Westchester and Putnam County

Which retirement income does New York tax?

Does New York tax my FDNY or NYPD pension?

No. A New York City pension is fully exempt from New York State and New York City income tax for New York residents. It is taxable on your federal return.

Line-of-duty accident disability pensions are generally excluded from federal income tax when paid under a statute in the nature of workers' compensation. Ordinary disability and service pensions are generally taxable. Confirm your situation with a tax professional.

How does the $20,000 pension and annuity exclusion work?

New York residents 59½ or older can subtract up to $20,000 a year of qualifying pension and annuity income, including IRA, 401(k) and 457 withdrawals.

Married couples each get their own $20,000 exclusion on their own income, whether they file jointly or separately. A surviving spouse who receives both their own and their late spouse's pension is capped at $20,000 total.

Your city pension's full exemption is a separate subtraction. It doesn't use up the $20,000, so that exclusion is still available for IRA or 457 withdrawals.

Are NYC deferred comp (457) withdrawals taxed in New York?

Yes. New York does not treat government 457 withdrawals as a government pension, so they don't get the full exemption your city pension gets. They qualify only for the $20,000 exclusion once you're 59½.

For a 20-year retiree in their 40s, that means pre-tax 457 withdrawals are fully taxable in New York for more than a decade. Roth 457 contributions are one way to manage that.

What about local taxes in Westchester and Putnam?

Outside New York City and Yonkers, New York has no local income tax. Moving from the city to Putnam County or most of Westchester ends New York City resident tax on income that is taxable, such as 457 and IRA withdrawals or second-career wages.

Property tax is the bigger line item in both counties. Homeowners can apply for the STAR credit, and those 65 and older under the income limit can qualify for Enhanced STAR. Many towns also offer senior exemptions with their own income limits.

Will New York tax my pension if I move out of state?

No. Federal law (4 U.S.C. §114) bars New York from taxing pension income paid to nonresidents. Your new state's rules apply instead: some have no income tax, some exempt public pensions and some tax them in full.

Is there a federal tax break for retired first responders?

Yes. Retired public safety officers can exclude up to $3,000 a year of distributions from a governmental retirement plan that are used to pay health or long-term care insurance premiums. Ask your tax preparer how to claim it.