Kristie Ackert of the New York Daily News reported the news Wednesday, noting Paxton said as much when asked about his deal.
The southpaw is under contract through just this season, when he will make $12.5 million in base salary.
New York acquired Paxton from the Seattle Mariners via trade following the 2018 campaign, which was a notable move seeing as was a model of consistency in the American League West.
In fact, he finished with an ERA below 4.00 in each of the six years he pitched for Seattle.
He was also particularly impressive in 2017 with a 2.98 ERA, 1.10 WHIP and 156 strikeouts in 136 innings and shined during his first season with the Yankees with a 3.82 ERA, 1.28 WHIP and 186 strikeouts in 150.2 innings.
Paxton helped lead New York to an American League East crown and appearance in the American League Championship Series against the Houston Astros. While the Astros won the series, Paxton was brilliant in his Game 5 start and spearheaded a victory by allowing one run and four hits with nine strikeouts in six innings.
It was a testament to his ability to pitch under pressure, which is key in New York.
The Yankees may be waiting to see if Paxton is still as formidable during the 2020 campaign at 31 years old before approaching him about a long-term deal, but he has shown no signs of slowing down to this point.