New York City Unincorporated Business Tax (UBT)

The New York City Unincorporated Business Tax (UBT) is a local tax imposed by the City of New York on certain unincorporated business income earned from activities conducted wholly or partly within New York City. The tax is administered by the New York City Department of Finance. See the official Unincorporated Business Tax (UBT) overview.

What Is an Unincorporated Business for UBT Purposes?

For UBT purposes, an unincorporated business generally includes a trade, profession, or business conducted by sole proprietors, partnerships, limited liability companies (LLCs) treated as partnerships or disregarded entities for federal tax purposes, and certain estates, trusts, or other unincorporated entities engaged in business activity. Official guidance is provided by the NYC Department of Finance in its UBT information.

Who Is Subject to the Unincorporated Business Tax?

The UBT generally applies to net income from unincorporated business activity allocated to New York City. Whether a business is subject to UBT depends on the nature of the activity and the amount of income attributable to NYC. For current rules, refer to the NYC Department of Finance UBT filing guidance.

UBT Tax Rate

The Unincorporated Business Tax is imposed at a rate of 4 percent of taxable income allocated to New York City. The NYC Department of Finance publishes the current rate and general calculation guidance on its UBT overview page.

Income Allocation to New York City

If an unincorporated business operates both inside and outside New York City, only the portion of income allocated to NYC is subject to UBT. Allocation methods depend on the type of business and where income-producing activity occurs. Forms, instructions, and worksheets are available through the NYC Department of Finance Business Tax Forms page.

Exemptions From the Unincorporated Business Tax

Certain activities and taxpayers are not subject to UBT. Examples include income earned solely as an employee and certain activities involving holding, leasing, or managing property for a taxpayer’s own account. For the current list and explanations, see the NYC Department of Finance UBT exemptions and rules.

Filing Requirements and UBT Forms

Taxpayers subject to UBT must file the appropriate annual return and may be required to make estimated tax payments. Official forms, instructions, and e-filing options are provided by the NYC Department of Finance on the Business Tax Forms and instructions page.

Credits Related to the Unincorporated Business Tax

Certain taxpayers may be eligible for credits related to UBT paid. Information on New York City-related credits is published by the New York State Department of Taxation and Finance in its New York City tax credits guidance.

Penalties and Enforcement

Failure to file or pay may result in penalties, interest, and enforcement actions. The NYC Department of Finance provides information on compliance and collections on its
collections and enforcement page.

Related Reading

Because government programs and tax filings often reference industry classification, see our guide to NAICS industry classification.

Conclusion

The New York City Unincorporated Business Tax (UBT) applies to certain unincorporated business income allocated to New York City. Taxpayers should rely on the NYC Department of Finance for current filing requirements, forms, and allocation rules, and review applicable credits and enforcement guidance as needed.

M. Spik

Editor
25 years of experience managing tax, accounting, payroll, and employment-related information portals. Editor of Accounting Portal since 2011.
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