Most of what changes for a tradesperson in New York is set by the state, not Washington: how you get paid, whether you need to register, and what you owe in tax. Here is what actually differs, and where to run your own numbers.
Each section below points to a tool that runs your exact numbers for New York.
Tax in New York
New York has a graduated state income tax that runs up to 10.9% at the top, on top of your federal taxes. Graduated means the rate climbs as your profit does, so a good year costs proportionally more. You owe federal income tax and self-employment tax as well, and you make estimated payments to both New York and the IRS through the year.
On sales tax, New York is one to read carefully. Repair/maintenance/install labor taxable; capital improvements exempt (Pub 862). Charging tax you should not, or eating tax you should have passed on, comes straight off your margin, so confirm it for your kind of job.
Work out what to hold back on the Tax Set-Aside Calculator, which runs the federal and self-employment numbers for New York.
Getting paid: liens and retainage
A mechanic's lien is the tool that actually gets a New York contractor paid, and in New York you generally have to record it within 4 months of your last day of furnishing. Miss it and you lose the lien, so the dates matter.
Enforcing it has its own clock. 1 year from filing. Work out your dates on the Lien Deadline tool, and if they are close, get an attorney to confirm them against the statute (N.Y. Lien Law §§10, 17).
On money held back as retainage, here is where New York lands:
- Private work: 5% of the contract sum where the aggregate cost of the project, including all labor, services, materials and equipment, is $150,000 or more; public works and most one-, two- and three-family residential and small residential-tract work are excluded.
- Public work: 5% of each progress payment. 5% of each progress payment.
- Release: Private: 30 days (the statute does not say whether these are calendar or business days) from final approval of the work under the construction contract. Public: no number of days is set at all. It falls due on substantial completion, then item by item as each remaining punch-list item is satisfactorily completed or corrected.
- Prompt pay: Private: 7 days from receipt of good funds, and the payment-timing provisions cannot be varied by contract. Public: 7 calendar days, said in terms. Late release of private retainage carries 1% a month from the date it was due and owing.
Check the size of the job before you check the percentage. New York's cap does not reach every contract. The condition on it, in the statute's own terms: the aggregate cost of the project, including all labor, services, materials and equipment, is $150,000 or more; public works and most one-, two- and three-family residential and small residential-tract work are excluded.
Heads up: Chapter 654 of the Laws of 2025, signed 19 December 2025, is reported to void any contract clause requiring retainage above 5%, but the codified text of GBL §757 did not yet show that clause when this row was bought. Treat the void-provision rule as in force and its exact wording as unconfirmed.
Check the Retainage Calculator before you sign a contract that holds back more.
Free New York retainage letters
Three letters written for New York's rules, with the state's own release clock and its statutory citation already in them. Fill one in on screen and download it as a PDF or a Word file.
- Retainage Release Request (New York), for when the job is done and the money has not come back
- Retainage Overdue: Demand for Payment (New York), for when the release date has passed and nothing has arrived
- Retainage Held Above the Cap: Challenge Letter (New York), for when more is being held than the state appears to permit
Do you need a license in New York?
New York has no statewide general contractor license, so for most building work there is no state license to get. That is one of the things that makes New York straightforward to start in. It does not mean no rules at all: the state still licenses specific trades like electrical and plumbing, and your city or county can require its own registration or permits, so always check locally before you take a job on.
Trade licenses for electrical, plumbing and HVAC are usually separate and often required even where a GC license is not. See what applies to your trade on the Contractor License Checker.
Building codes and permits
New York adopts its building codes statewide, so the rules travel with you across the state. Editions still move, so confirm yours with the building department before you price a job.
- Homes: 2025 Residential Code of New York State (effective 31 December 2025; the state does not publish which ICC edition it is built on)
- Electrical: 2023 (incorporated by reference into the 2025 Uniform Code; New York City separately runs a 2020 NEC basis)
- Energy: 2025 Energy Conservation Construction Code with NYS ASHRAE 90.1-2025, but its fossil-fuel provisions are suspended by federal court order
- Plumbing: 2025 Plumbing Code of New York State (New York City separately runs a 2015 IPC basis)
Outside New York City the state code is mandatory and no municipality may make it less restrictive; a town may adopt stricter standards only with Code Council approval. A local government may opt out of ENFORCEMENT, not of the code, in which case the duty passes to the county and then to the Department of State, so the code always applies and only the enforcer changes. Two things need watching. The state names its code books by their own New York year and does not publish the underlying model edition, so do not compare our year against an ICC year. And the fossil-fuel equipment ban embedded in the 2025 energy and uniform codes is currently suspended by a federal court order pending appeal, so that equipment remains permitted meanwhile. New York City is a separate jurisdiction with its own codes, its own editions and its own dates: its electrical code moved to a 2020 NEC basis on 21 December 2025 and its energy code only applied to filings from 30 March 2026.
Source: 19 NYCRR parts 1219 to 1229 (Uniform Code) and part 1240 (Energy Code), adopted by the State Fire Prevention and Building Code Council and filed by the Department of State, effective 31 December 2025; Executive Law §§378, 379, 381 and 383; NYC Local Law 128 of 2024 and Local Law 47 of 2026. We have not yet read this row against New York's own adopting authority, so confirm the edition locally before you rely on it.
Check a specific job on the permit tool.
Pay and workers' comp
The minimum wage in New York is $16.00 an hour. New York City, Nassau, Suffolk and Westchester: $17.00. The rest of the state is $16.00. That is the floor for anyone you put on the books, and it is worth confirming against the state labor department each year because several states step their rate mid-year. Check a rate on the minimum-wage tool.
On workers' comp, the rule that catches people out in New York is who has to be covered. New York is the strictest state: virtually everyone, including owners, must be covered, with almost no small-firm exclusion. Get a premium range for your trade on the Workers' Comp Estimator.
If a client will not pay
If a client will not pay, you can sue for up to $10,000 in New York's Small Claims Court. That covers most unpaid-invoice disputes for a small outfit; a bigger claim goes to regular civil court where you will probably want an attorney. Walk through whether filing is worth it on the Small Claims checker.
The clock runs the other way too: a client generally has 6 years to sue you over the work under a written contract in New York, and there is no absolute cutoff, so your exposure turns on when a defect is found. Work out your exposure on the Warranty & Claim Deadline tool.
Common questions
How much state income tax will I pay in New York?
New York has a graduated rate up to 10.9% state income tax on your profit, on top of federal income tax and self-employment tax. Use the Tax Set-Aside Calculator to see what to hold back.
Do I need a contractor's license in New York?
For most general building work, no. New York has no statewide general contractor license. The state still licenses specific trades and your city or county may require its own registration, so check both.
What is the small claims limit in New York?
You can sue for up to $10,000 in New York's Small Claims Court. The filing fee is typically $15 to $20. Larger claims go to regular civil court.
How long do I have to file a mechanic's lien in New York?
Generally 4 months from your last day of furnishing. Miss it and you lose the lien. Work your own dates out on the Lien Deadline tool.
How much retainage can be held back in New York?
Private: 5% of the contract sum where the aggregate cost of the project, including all labor, services, materials and equipment, is $150,000 or more; public works and most one-, two- and three-family residential and small residential-tract work are excluded. Public, state agency: 5% of each progress payment. Public, local government: 5% of each progress payment. Run your own figure on the Retainage Calculator.
Are there free New York contract and payment forms?
Yes. This page links 3 retainage letters written to New York's own release clock and carrying its statutory citation. They are free, there is no sign-up, and you fill one in on screen and download it as a PDF or a Word file.
What is the minimum wage in New York?
$16.00 an hour in New York, above the federal $7.25. Several states step their rate mid-year, so confirm it before you set a payroll.
The honest bit
These are the 2026 rules for New York as they stood when this guide was written, and they change: legislatures move thresholds, deadlines and rates every year. Treat this as general guidance to point you in the right direction, not legal, tax or financial advice. Verify anything you rely on at the source (the IRS, the New York tax and licensing agencies, and your local building department) or with a professional. Where New York does something unusual, the detail is called out above rather than glossed over.
Related: Tax Set-Aside Calculator · Mechanic's Lien Deadline · Contractor License Checker · Small Claims checker · Working in Your State
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Sources
- New York statutes (nysenate.gov) · Mechanics lien notice, filing and enforcement deadlines in New York: N.Y. Lien Law §§10, 17. Verified against this authority on 2026-08-09.
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