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Insurance offered through OnPay Insurance Agency, LLC (CA License #0L29422)
Updated: June 27, 2023
Ninety-eight-nine percent of all businesses in New York have fewer than 100 employees, so if you’re operating a small business, you’ve got a lot of company when it comes to figuring out payroll taxes. Whether in the city or upstate, employers can use our free payroll calculator at the top of this page, as well as the resources below to stay ahead of their payroll tax obligations.
Fast facts about New York State payroll taxes
- Employers must withhold Social Security and Medicare taxes from employees’ wages as well as their own contributions for the IRS.
- Residents of New York City and Yonkers are subject to additional income tax.
- Employees who work in New York State but are not residents are subject to income tax withholding.
Federal payroll taxes for New York employers
Of course, New York taxes are just part of the total tax equation. Let’s go over federal payroll taxes first. Our New York payroll calculator can also help you figure out the federal payroll tax withholding for both your employees and your business.
Below is a summary of everything that goes into calculating the payroll tax for a New York employee. If you would like to see a more detailed calculation, check out our step-by-step guide here.
- Figure out the employee’s gross wages. Gross wages represent the amount of money an employee has earned during the most recent pay period.a.Hourly employees: Multiply the number of hours worked in the most recent pay period by their pay rate. Make sure to calculate any overtime hours worked at the appropriate rate.b.Salaried employees: Divide each employee’s annual salary by the number of pay periods you have each year.
- Deduct any pre-tax withholdings. Do your employees have a 401(k), flexible spending account (FSA), or other pre-tax deductions? If so, subtract them from gross pay before you start applying federal payroll taxes. The process for documenting and remitting these funds is likely going to vary depending on the benefits providers you work with. Note that many services can be integrated with payroll software, which allows you to automate your deductions.
- Deduct and match any FICA taxes to cover Medicare and Social Security taxes:a.Social Security tax: You need to withhold 6.2% of each employee’s taxable wages until they have earned $160,200 in a given calendar year. As the employer, you must match this tax.b.Medicare tax: Also withhold 1.45% of each employee’s taxable wages. You will need to match this tax as well for a total of 2.9%. For employees who earn more than $200,000 in taxable wages, you need to withhold what’s called an Additional Medicare Tax of 0.9%. Only the employee is responsible for paying the Additional Medicare Tax.
- Pay FUTA unemployment taxes: You as the employer are responsible for paying 6% of the first $7,000 of taxable income an employee earns annually. Note that you can claim a tax credit of up to 5.4% for paying your New York state unemployment taxes in full and on time each quarter, which means that when everything’s said and done, you’ll only have to pay 0.6% FUTA tax. Note that employees are not responsible for paying FUTA taxes.
- Deduct federal income taxes, which can range from 0% to 37%. Withholding information can be found through the IRS.
- Subtract any post-tax deductions: Some employees may be responsible for court-ordered wage garnishments or child support. They may also choose to make post-tax contributions to savings accounts, elective benefits (like life insurance), or other withholdings.
New York State payroll taxes for 2023
Calculating taxes in New York is a little trickier than in other states. The state as a whole has a progressive income tax that ranges from 4.% to 10.9%, depending on an employee’s income level. There is also a supplemental withholding rate of 11.70% for bonuses and commissions.
In New York state, an employee’s tax burden can also vary based on location. Specifically, residents of New York City or Yonkers are subject to additional income taxes:
- New York City surcharge: A 4.25% (.0425) income tax is deducted from taxable wages
- Yonkers surcharge (as of January 1, 2023): People who work in Yonkers as well as Yonkers residents pay a tax of less than 1%, based on a number of factors
- Yonkers Resident ………………………. 1.95975% (.0195975)
- Yonkers Nonresident ………………….. 0.50% (.0050)
You can find detailed instructions on how to apply these local New York payroll taxes through the NY Department of Taxation. Taxes should be paid to the state on an ongoing basis using the following forms:
- Form NYS-1: Monthly Withholding Payment. Before you can fill out your NYS-1, you’ll need to register as a new employer.
- Form NYS-45: Quarterly Withholding Reconciliation, Wage Reporting, and Unemployment Insurance. Here are detailed instructions.
Non-resident employees
Because New York State considers income earned within its borders to be taxable, employees who work in the state (but are not residents) are subject to income tax withholding. Employers are responsible for withholding the appropriate amount of tax from their employees’ paychecks and also remitting it to the state on their behalf.
To figure out how much tax to withhold, employees on the payroll who work in the state, but live elsewhere, complete Form IT-2104.1 (also known at the Employee’s Withholding Allowance Certificate). As an employer, you’ll use the information your employee provides to figure out how much tax to withhold.
- New York State provides instructions on how to complete Form IT-2104.1
- And a printable version of Form IT-2104.1
Reporting new hires in New York
- All employers in New York are required to report new hires to the state Department of Taxation within 20 calendar days of their hire date.
- You must also notify the state of any previously employed workers who were on your team, left for another employer for 60 days or more, and have since returned to your organization.
- As of January 1, 2022, an employer also must report any independent contractors who have contracts that exceed $2,500.
New York unemployment insurance
In 2023, on the first $12,300 each employee earns, New York employers also pay unemployment insurance of between 2.1% to 9.9%. In 2022, it was $12,000. Certain churches and non-profits are exempt from this payment. If you’re a new employer, you’ll pay a flat rate of 4.1%. Learn more about your NY UI rate here.
Pay frequency in New York
New York State Labor Law requires manual workers to be paid weekly, while clerical and other workers must be paid at least twice per month (this is a bi-weekly schedule). Some employers may apply to pay employees less frequently.
More information is available from New York state
New York State disability insurance
Along with payroll-related taxes and withholding, New York employers are also responsible for providing employees with State Disability Insurance (SDI) to cover off-the-job injury or illness. The state allows employers to withhold 0.5% of wages, but no more than $0.60 per week, from employees to help fund this policy.
Paid family leave
New York is one of the states with PMFL insurance to help employees have at least some wages coming in should they be unable to work due to illness (or if an employee needs to care for a sick family member).
Because the program is funded by contributions from employee’s after-tax wages, employers are responsible for collecting them when running payroll and then remitting the money to the state. Additionally, employers may choose to pay this contribution on behalf of employees rather than deduct it from their wages.
- For 2023, New York’s contribution rate is 0.455% of an employee’s gross wages during each pay period.
- The maximum annual contribution for an employee is $399.43.
More information is available from New York state
Write your employees’ paychecks!
You’re good enough, you’re smart enough, and gosh darn it, you’ve figured out all your payroll! Once you’ve calculated your employees’ net pay by working out all their deductions and withholdings, you’re ready to cut their checks.
In addition to making sure your employees get paid on time, don’t forget to set aside the employer taxes your company is responsible for. Those FICA and UI payments can add up if you don’t remit them on a regular basis.
Federal tax filings are due quarterly by filing Form 941 and annually by filing Form 940, but for most New York employers, taxes must be paid on an ongoing basis via the EFTPS payment system. Find detailed information from the IRS here.
Do you have employees nearby too? These might be helpful.
Additional NY payroll tax resources
Our calculator can help you do most of the heavy lifting, but here are some additional resources and contact information you may need to start running payroll in New York:
New York Department of Taxation & Finance (withholding assistance): (518) 485-6654 | Register for Withholding Taxes
New York Department of Labor (unemployment insurance assistance): (518) 457-9000 | Register for NY Unemployment Taxes
You can also learn more about city taxes and determine the appropriate withholding rates for your employees here:
All of the rates on this page are based on local legislation and can change at any time. Always consult a tax professional if you are unsure about your obligations.
Other useful payroll calculators
If you’re an employer in the state of New York, you can use the calculator at the top of this page to figure out your employees’ federal withholding as well as any additional taxes you need to pay without breaking a sweat. However, employers sometimes have to manage situations that require a bit more number crunching when cutting paychecks. For example, if you give bonuses to employees, Uncle Sam considers this income and taxes need to be withheld. Furthermore, if an employee leaves for another job, you may need to calculate a final pay check. So, if you need a little more help with the math, take a look at the additional calculators below.