N.Y. Comp. Codes R. & Regs. Tit. 20 § 120.3 - Limitations where credit against ordinary tax is claimed for income taxes paid both to a state and also to one or more of its political subdivisions

Tax Law, § 620(b)

When both a state (other than New York State) and one or more of that state's political subdivisions impose income taxes on the same or different amounts of income derived from sources within such state and political subdivision, the maximum resident credit against ordinary tax is the lowest of the amounts determined after computing the following three limitations:

(a) The credit for the taxable year cannot exceed the total of income taxes payable to the other state and the subdivision or subdivisions of such state. (For notification of a change of tax payable to the other state or a subdivision thereof, see section 120.2[a] of this Part.)

(b) The credit for the taxable year cannot exceed the amount obtained by multiplying the New York State tax payable (see section 120.4[b] of this Part) by a percentage determined by dividing the portion of the taxpayer's New York income subject to taxation in such other jurisdictions (the numerator) by the taxpayer's total New York income (the denominator). Where different amounts of income are subject to income tax by both the other state and by one or more of its subdivisions, the larger amount of income subject to tax by either the state or one or more of its subdivisions must be used in the numerator of this computation.

(c) The credit for the taxable year for total income taxes paid to both a state and to one or more of its political subdivisions cannot reduce the New York State tax payable to an amount less than would have been due if the income subject to taxation by the other jurisdictions (or, where different amounts of income are subject to income tax by the other jurisdictions, the larger of such amounts) were excluded from the taxpayer's New York income.

Notes

N.Y. Comp. Codes R. & Regs. Tit. 20 § 120.3