New York Payroll Taxes 2026: Complete Overview for Employers

Overview: Five New York Payroll Tax Obligations

New York is widely recognized as one of the most complex states for payroll compliance. Unlike states with a single flat income tax or no income tax at all, New York layers multiple taxes — each with its own rates, wage bases, filing agencies, and deadlines. As an employer, you’re responsible for understanding all of them.

Here’s a summary of all five payroll tax obligations New York employers face in 2026:

Let’s break down each one in detail.

State Income Tax Withholding

New York State has a graduated income tax system with rates ranging from 4% to 10.9%. As an employer, you must withhold state income tax from every employee’s paycheck based on the information they provide on Form IT-2104 (Employee’s Withholding Allowance Certificate).

The IT-2104 is New York’s equivalent of the federal W-4. Employees use it to declare their filing status, number of allowances, and any additional withholding. If an employee doesn’t submit an IT-2104, you must withhold at the single rate with zero allowances — the highest default withholding.

2026 New York State Income Tax Brackets (Single Filer)

Key Points for Employers

• Withholding tables — The NY Tax Department publishes annual withholding tables (NYS-50-T-NYS for state, NYS-50-T-NYC for city). Use these or an approved payroll system to calculate the correct amount.
• Supplemental wages — Bonuses and other supplemental wages can be withheld at a flat rate or aggregated with regular pay. The optional flat rate for New York supplemental wages is 11.70%.
• Non-resident employees — If an employee performs work in New York but lives in another state, you must still withhold New York income tax on the wages earned within New York.
• Remote workers — New York applies the “convenience of the employer” rule. If an employee works remotely from another state for their own convenience (not the employer’s necessity), those wages are still taxable in New York.

State Unemployment Insurance (SUI)

New York’s State Unemployment Insurance (SUI) is an employer-paid tax that funds unemployment benefits for workers who lose their jobs through no fault of their own. SUI is administered by the New York Department of Labor (DOL).

2026 SUI Rates

• New employer rate: 4.1% (for most industries)
• New employer rate — construction: 5.5%
• Experience-rated employers: 2.1% to 9.9%, depending on claims history
• Taxable wage base: $12,500 per employee per year

Once an employee earns $12,500 in a calendar year, you stop paying SUI on their wages for the remainder of that year. This means SUI costs are front-loaded early in the year for higher-paid employees.

How Experience Rating Works

After your business has been operating for a sufficient period (typically three years with reportable payroll), the DOL assigns an experience rate based on your unemployment claims history. The more claims filed against your account, the higher your rate. Employers with few or no claims will see their rate drop well below the 4.1% new employer rate — potentially as low as 2.1%.

Subsidiary and Re-rating Assessments

In addition to the base SUI rate, the DOL may add subsidiary assessments to shore up the UI Trust Fund balance. These subsidiary rates change annually and are listed on your rate notice. When combined with the base rate and any subsidiary assessments, the effective SUI rate can sometimes exceed the published maximum base rate.

For a deeper dive, see our full guide: New York SUI Rates 2026.

Disability Insurance (SDI)

New York is one of a handful of states that require employers to provide short-term disability insurance (SDI) to their employees. This coverage provides partial wage replacement when an employee is unable to work due to a non-work-related illness, injury, or pregnancy.

Key SDI Details for 2026

• Who pays: Employees pay the premium, but the employer is responsible for obtaining and maintaining the policy.
• Maximum employee contribution: $0.60 per week, withheld from the employee’s paycheck.
• Benefit amount: 50% of the employee’s average weekly wage, up to a maximum weekly benefit of $170.
• Benefit duration: Up to 26 weeks per disability.
• Coverage requirement: All employers with one or more employees on each of 30 days in any calendar year must carry SDI coverage.

How to Obtain Coverage

Unlike SUI, which is administered directly by the state, SDI must be obtained through one of three methods:

1. Private insurance carrier — Purchase a policy from any carrier licensed to sell disability benefits insurance in New York. This is the most common approach.
2. State Insurance Fund (SIF) — The New York State Insurance Fund offers disability coverage as an option for employers who prefer a state-backed carrier.
3. Self-insurance — Larger employers can apply to the Workers’ Compensation Board (WCB) for approval to self-insure, which requires a security deposit.

Failure to provide SDI coverage is a misdemeanor and can result in fines of $500 per 10-day period of non-compliance plus liability for any benefits owed.

Paid Family Leave (PFL)

New York’s Paid Family Leave program, enacted in 2018, provides employees with job-protected, paid time off to bond with a new child, care for a close family member with a serious health condition, or assist with family obligations when a family member is deployed on active military duty.

2026 PFL Rates and Benefits

• Employee contribution rate: ~0.388% of the employee’s gross wages (set annually by the Department of Financial Services).
• Wage cap: Contributions are capped at the statewide average weekly wage (SAWW). For 2026, the SAWW is approximately $1,757.19 per week ($91,373.88 annualized).
• Maximum weekly employee contribution: Approximately $6.82 per week.
• Benefit amount: 67% of the employee’s average weekly wage, up to 67% of the SAWW (approximately $1,177.32 per week).
• Benefit duration: Up to 12 weeks of leave per 52-week period.

Employer Responsibilities

PFL is 100% employee-funded through payroll deductions. The employer’s role is to:

1. Withhold the correct PFL contribution from each employee’s paycheck.
2. Remit the collected contributions to your disability/PFL insurance carrier.
3. Add PFL coverage to your existing disability insurance policy (most carriers bundle SDI and PFL together).
4. Post required notices informing employees of their PFL rights in the workplace.
5. Process PFL claims by forwarding employee requests to your carrier within the required timeframe.

For a complete breakdown, see our guide: New York PFL & Disability Insurance 2026.

Metropolitan Commuter Transportation Mobility Tax (MCTMT)

The MCTMT is a payroll tax paid by the employer that funds the Metropolitan Transportation Authority (MTA). It applies only to employers within the MTA commuter district — a defined set of counties in the New York City metropolitan area.

Covered Counties (MTA Commuter District)

• New York City (all five boroughs: Manhattan, Brooklyn, Queens, Bronx, Staten Island)
• Nassau County
• Suffolk County
• Westchester County
• Rockland County
• Orange County
• Dutchess County
• Putnam County

2026 MCTMT Rate and Threshold

• Rate: 0.34% of payroll expense for employers with quarterly payroll expense exceeding $312,500.
• Who pays: The employer. This is not deducted from employee wages.
• Threshold: The tax applies when your total payroll expense for employees working within the MTA district exceeds $312,500 in any calendar quarter ($1,250,000 annualized).

MCTMT for Self-Employed Individuals

The MCTMT also applies to self-employed individuals (including partners and LLC members) with net earnings from self-employment allocated to the MTA district exceeding $50,000 per year. The self-employed rate is also 0.34%.

For more details, see our dedicated guide: New York MCTMT Explained.

Where and How to Pay

One of the complexities of New York payroll is that different taxes go to different agencies. Here’s a summary of where each payment goes:

PrompTax — New York’s Electronic Filing System

New York requires most employers to use the PrompTax electronic filing and payment system for income tax withholding. PrompTax integrates with the ACH network and allows the Tax Department to initiate debits from your bank account on the scheduled due date. Enrollment is mandatory for employers meeting certain payroll thresholds.

For SUI, the NY DOL provides a separate online employer portal where you file quarterly returns (Form NYS-45) and make payments electronically.

Filing Schedules and Deadlines

Each New York payroll tax has its own filing frequency and deadlines. Missing them can result in penalties and interest, so it’s critical to track every one.

State Income Tax Withholding

Filing frequency depends on the amount you withhold:

• PrompTax filers (most employers): Deposits are due within 3 business days of the payroll date, automatically debited via ACH.
• Quarterly filers (very small employers): Due on the last day of the month following the end of the quarter (April 30, July 31, October 31, January 31).

All employers must also file an annual reconciliation return — Form NYS-45 — by January 31 of the following year.

SUI (Unemployment Insurance)

• Quarterly filing: Form NYS-45 is due by the last day of the month following each quarter’s end (April 30, July 31, October 31, January 31).
• Wage reporting: Part C of Form NYS-45 reports individual employee wages. This is required even if no tax is due for the quarter.

SDI and PFL

• Premium payments: Follow the schedule set by your insurance carrier — typically monthly, quarterly, or annually depending on your policy.
• Claim processing: When an employee files a PFL or SDI claim, you must forward the required forms to your carrier promptly.

MCTMT

• Quarterly filing: Due on the same schedule as withholding tax (last day of the month following the quarter end).
• PrompTax filers: If you’re enrolled in PrompTax for withholding, MCTMT payments may also be handled through the same system.
• Annual return: Form MTA-305 is due by March 15 of the following year.

Penalties for Late Filing and Payment

New York imposes penalties for late filing, late payment, and failure to comply with payroll tax obligations. These can add up quickly, especially for smaller businesses operating on tight margins.

State Income Tax Withholding Penalties

• Late filing penalty: 5% of the unpaid tax for each month (or partial month) the return is late, up to a maximum of 25%.
• Late payment penalty: 0.5% of the unpaid tax per month, up to 25%.
• Interest: Charged on any unpaid balance at the prevailing rate set by the Tax Department (adjusted quarterly).
• Failure to withhold: The employer can be held personally liable for the full amount of tax that should have been withheld, plus penalties and interest.

SUI Penalties

• Late filing: The DOL may impose penalties for late quarterly returns and may also increase your SUI rate.
• Failure to register: Operating without a valid UI employer registration number can result in fines and back-assessment of all unpaid contributions.
• Fraud: Intentional misrepresentation on UI filings can lead to criminal prosecution.

SDI Non-Compliance

• Failure to carry coverage: This is a misdemeanor. Penalties include a fine of $500 for every 10-day period the employer is uninsured, plus full liability for any benefits owed to employees during the gap in coverage.
• Workers’ Compensation Board enforcement: The WCB can issue stop-work orders for employers without disability insurance coverage.

PFL Non-Compliance

• Failure to obtain PFL coverage: Same penalties as SDI non-compliance — $500 per 10-day period, plus liability for benefits.
• Retaliation: Employers who retaliate against employees for taking PFL leave face additional penalties, including reinstatement with back pay and liquidated damages.

MCTMT Penalties

• Same late filing and late payment penalty structure as state income tax withholding (5% per month for late filing, 0.5% per month for late payment, plus interest).

Don’t Forget Federal Payroll Taxes

In addition to all five New York state-level taxes, every employer must also withhold and remit federal payroll taxes. These include:

• Federal income tax withholding — Based on the employee’s W-4 and IRS withholding tables.
• Social Security tax (OASDI) — 6.2% employer + 6.2% employee on wages up to $176,100 (2026 wage base).
• Medicare tax — 1.45% employer + 1.45% employee on all wages, plus an additional 0.9% employee-only tax on wages over $200,000.
• Federal Unemployment Tax (FUTA) — 6.0% on the first $7,000 per employee, reduced to an effective rate of 0.6% after the standard 5.4% state credit.

Federal payroll taxes are deposited via EFTPS (Electronic Federal Tax Payment System) on either a monthly or semi-weekly schedule, depending on your lookback period liability. Quarterly reporting is done on Form 941.

For a complete breakdown, see our guide: Federal Payroll Taxes Explained.

Frequently Asked Questions