You can watch Youtube incognito for free but you need to login to benefit from subscribing.
Tracking has long moved way beyond cookies and Google is absolutely tracking what you do in incognito mode and doing their best (which is highly effective) to associate the tracking data with you.
If you want better recommendations though you may have to tolerate some things that you may consider "spying".
I personally don't care for better recommendations. I just need a functional subscription/notification system and much much better search.
If you really don't want to be tracked by Google, you should probably consider not using their services.