Payroll tax in New York: What employers need to know [2024]

There are many reasons to start a business in New York state. Not only does the Empire State boast beautiful, diverse locations, ranging from vibrant New York City to quiet Westchester County and beach-filled Long Island, but you also have access to a tremendous talent pool.

As New York employers know, however, running a company in NYS also comes with the responsibility of state payroll taxes on top of US FICA taxes, like Medicare tax and Social Security tax. And, regulations vary across the state, so it’s crucial to understand the tax and labor laws in New York to avoid penalties.

New York is known for its complex tax system, which includes a progressive income tax. Simply put, the more your employees earn, the more they’ll owe the state. Similarly, if your business is growing and you’re bringing on more new hires, your employer tax contributions will be higher, as will the income tax withholdings from employees’ gross pay.

To run a small business or a global corporation successfully in the Empire State, you must have a good understanding of the different types of New York state taxes, each of the tax rates, and who owes what when. We’ll cover that and more in this helpful primer.

The 5 New York payroll taxes

In New York, the Department of Taxation and Finance (frequently called the Tax Department) is responsible for administering payroll taxes at the state level. Under the Tax Department’s new hire reporting laws, you must report a new hire or a rehired employee within 20 days of the hiring date. Additionally, as of January 1, 2022, employers are also required to report independent contractors on their payroll if they have a contract that pays them $2,500 or more for their work.

There are five types of payroll taxes in New York state. We’ll go over each one below.

Unemployment insurance tax

New York requires all employers to pay a state unemployment insurance (UI) tax to fund a state program that provides temporary financial relief to those who have found themselves without a job due to a circumstance beyond their control. UI tax rates and taxable wages are determined annually according to the amount that’s in the state’s UI Trust Fund. For 2024, the tax rate for new employers is 4.1%, while the tax rates for established employers range from 2.1% to 9.9%. A new tax rate will be determined for you after you’ve been an employer for five quarters; then, it will be based on your UI experience, as determined by the Department of Labor.

Under the Federal Unemployment Tax Act (FUTA), New York employers typically must also pay a federal unemployment tax.

Re-employment tax

New York employers are required to remit a small percentage of their wages—0.075%—to the Re-employment Service Fund (RSF), which is used to pay for staff members to administer the state’s unemployment insurance programs and to develop automated programs to help people who are trying to claim UI benefits. This is known as the re-employment tax.

State disability insurance tax

New York is one of the states that offers a state disability insurance (SDI) program to provide temporary financial relief to workers who are experiencing non-work-related injuries, illnesses, or pregnancy. This program is funded by an SDI tax, which employers can choose to either fully cover on their own or to pay by withholding a percentage of their employee’s wages. Under state law, employers can withhold 0.5% of a worker’s paycheck or no more than $0.60 per week.

Paid Family Leave tax

As of January 1, 2023, the state of New York updated its Paid Family Leave (NYPFL) law and now mandates that the benefit be covered entirely by deductions from employees’ gross wages. NYPFL provides financial support to eligible employees who need to take time off from work to:

• Take care of a family member with a serious health problem
• Bond with a new child
• Get ready for a family member to enter active military service

Personal income tax

On top of federal income taxes, New York state has a progressive personal income tax, which includes both a state income tax and an additional local income tax for the residents of New York City and Yonkers. This money goes towards the state and local budgets, which pay for things like education, health, libraries, roads, and parks. Employers are required to withhold state income tax (and local income tax, if applicable) from an employee’s gross pay. Each individual’s tax rate is based on their W-4 form, and the rate they pay is based on their income, not their filing status.

For 2024, the state income tax rate ranges from 4% to 10.9%. The NYC income tax system is also progressive; its tax rate ranges from 3.078% to 3.867%.

Navigating payroll tax laws can be daunting. This is especially true in New York, where an employer’s tax burden differs depending on whether employees live upstate or in New York City and Yonkers, and where the progressive income tax system and four types of payroll taxes only add complexity. Fortunately, Rippling’s payroll compliance software makes it easy. Rippling automatically calculates your taxes and submits your tax forms and payments on your behalf—monitoring the tax laws at the federal New York state and local levels to ensure total compliance. Rippling’s PEO goes even further: It can register and maintain your state tax accounts for you, automating even more of the payroll tax process.

Payroll tax due dates in New York

New York employers owe UI tax each quarter and must file Form NYS-45, the Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return, four times a year. The due dates are as follows:

• First quarter (January-March): Due April 30
• Second quarter (April-June): Due July 31
• Third quarter (July-September): Due October 31
• Fourth quarter (October-December): Due January 31

If one of these dates falls on a weekend or a holiday, you may file on the next business day. If you file outside the pay periods, the amount of UI tax you pay in the future may increase as a result.

How to submit payroll taxes in New York

So, now that you know the types of payroll taxes and when to pay them, you’re likely wondering how you can submit your tax forms. Well, unlike New York’s tax system, it’s pretty simple.

Enroll in e-Services 

New York state mandates business taxpayers file their tax returns and make their payments electronically, and it’s provided a handy portal with which to do so. Just go to tax.ny.gov, follow the instructions to set up an account, and pay from there. You can even receive your bills online.

File by mail

The e-filing mandate penalizes employers who don’t submit their payroll taxes online. However, there are two exceptions to this rule: Employers who are filing an amended NYS-45-X form or an amended NYS-45-ATT must mail in a paper copy. You can’t amend a return online. You can find mailing instructions here.

Rippling’s full-service payroll software

Looking for an even easier tax filing option? Rippling’s payroll software is so powerful, it practically runs itself. Rippling automates all your compliance work and files your federal and New York state and local payroll taxes at the right time and with the IRS, Department of Taxation and Finance, and any other applicable agencies.

FAQs about New York payroll taxes

Are there local tax laws in New York state?

Yes, 14 states, including New York, permit local governments, or municipalities, to levy local taxes. Specifically, residents of New York City and Yonkers must pay a local income tax in addition to state income tax.

Can your tax returns be audited in New York?

Yes, the Department of Tax and Finance routinely audits businesses to ensure they are paying the correct amount of taxes, including payroll tax.

Are nonprofit organizations subject to payroll taxes in New York?

Yes, nonprofit organizations are responsible for paying New York payroll taxes. According to the Department of Labor, unlike in some other states, nonprofits in New York must offer unemployment insurance and pay UI tax—they are not granted an exemption because they are a not-for-profit organization.

What is MCTMT tax in New York?

The metropolitan commuter transportation mobility tax (MCTMT) is a tax imposed on specific employers who do business in the Metropolitan Commuter Transportation District (MCTD).

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for, tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.