Payroll tax in New York: What employers need to know [2026]
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Running a business in New York comes with a significant payroll tax responsibility. On top of federal FICA taxes, New York employers must manage multiple state and local tax obligations, each with its own rates, wage bases, filing agencies, and deadlines.
New York uses a progressive income tax system, meaning the more your employees earn, the more they owe the state. The state's tax structure also varies by location: employees who live or work in New York City and Yonkers face additional local income taxes on top of state withholding. Understanding each of these obligations is essential to avoiding penalties.
This guide covers all six New York payroll tax obligations employers need to know in 2026, plus filing deadlines, how to submit payments, and how to simplify the process.
The New York payroll taxes employers need to manage
In New York, the Department of Taxation and Finance administers state withholding taxes, while the Department of Labor handles unemployment insurance. Under state new hire reporting laws, employers must report a new hire or rehired employee within 20 days of the hiring date. As of January 1, 2022, employers must also report independent contractors with contracts paying $2,500 or more.
There are six payroll tax obligations for New York employers. Here is what each one involves.
Unemployment insurance tax
New York requires all employers to pay a state unemployment insurance (UI) tax to fund temporary financial relief for workers who lose their jobs through no fault of their own. Rates and the taxable wage base are set annually.
For 2026, the UI wage base is $17,600 per employee, up from $12,800 in 2025. This is a significant jump because starting in 2026, the wage base permanently adjusts each January 1 to 18% of the state average annual wage, rounded up to the nearest $100. The new employer UI contribution rate for 2026 is 3.4%. Established employers receive an experience-based rate after five quarters of liability; rates vary depending on the employer's account history with the UI Trust Fund.
Under the Federal Unemployment Tax Act (FUTA), New York employers must also pay a federal unemployment tax.
Who pays | Employer |
|---|---|
New employer rate | 3.4% |
Experienced employer rate | Varies; set annually based on account history (up to 8.9%) |
Taxable wage limit | First $17,600 per employee per year |
Re-employment tax
New York employers also remit a Re-employment Service Fund (RSF) assessment of 0.075% of wages, up to a maximum of $9 per employee per year. This funds staff and automated systems that administer the state's unemployment insurance programs.
State disability insurance
New York's state disability insurance (SDI) program provides temporary financial relief to workers experiencing non-work-related injuries, illnesses, or pregnancy. Employers can either fully cover the cost themselves or withhold up to 0.5% of an employee's wages, capped at $0.60 per week. Coverage must be obtained through a private carrier or the New York State Insurance Fund (NYSIF).
Who pays | Employee |
|---|---|
Tax rate | 0.5% |
Maximum tax | $31.20 per employee, per year |
Paid Family Leave
New York Paid Family Leave (NYPFL) is funded entirely through employee payroll deductions. For 2026, the employee contribution rate is 0.432% of gross wages, capped at $411.91 per year. Once an employee's year-to-date PFL deductions reach $411.91, withholding stops for the remainder of the year. The maximum weekly benefit is $1,228.53 (67% of the statewide average weekly wage).
NYPFL provides up to 12 weeks of paid leave per 52-week period for eligible employees who need to:
Bond with a new child
Care for a family member with a serious health condition
Prepare for a family member entering active military service
Note that an employee cannot collect PFL and SDI benefits at the same time, and the combined total of SDI and PFL cannot exceed 26 weeks in any 52-week period.
Who pays | Employee |
|---|---|
Contribution rate | 0.432% of gross wages |
Annual maximum deduction | $411.91 per employee |
Maximum weekly benefit | $1,228.53 (67% of statewide average weekly wage) |
Personal income tax
New York has a progressive personal income tax in addition to federal income tax. For 2026, the state income tax rate ranges from 4% to 10.9%. Residents of New York City pay an additional local income tax ranging from 3.078% to 3.876%. Yonkers residents pay a local income tax surcharge of 16.75% of their state tax liability.
Employers are required to withhold both state income tax and the applicable local income tax (for NYC and Yonkers employees) from each employee's gross pay each pay period. Each employee's withholding is based on their IT-2104 form (New York's equivalent of the W-4) and their income level.
Who pays | Employee |
|---|---|
Tax rate | 4% to 10.9%, based on the employee's Form IT-2104 |
Taxable wage limit | No limit |
Maximum tax | No maximum |
Metropolitan Commuter Transportation Mobility Tax (MCTMT)
The MCTMT is an employer-paid tax that funds the Metropolitan Transportation Authority (MTA). It applies to employers whose quarterly payroll expense for employees working within the Metropolitan Commuter Transportation District (MCTD) exceeds $312,500. The tax rate is 0.34% of payroll expense and is paid entirely by the employer; it is not deducted from employee wages.
The MCTD covers two zones. Zone 1 includes the five boroughs of New York City (Manhattan, Brooklyn, Queens, Bronx, and Staten Island). Zone 2 includes Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester counties. Employers report and pay MCTMT through the Department of Taxation and Finance, on the same quarterly schedule as withholding tax.
Navigating New York's payroll tax obligations is complex, particularly when employees work in different parts of the state. Fortunately, Rippling's payroll compliance software automatically calculates your taxes and submits your tax forms and payments on your behalf, monitoring federal, New York state, and local tax laws to ensure total compliance. Rippling's PEO goes further by registering and maintaining your state tax accounts for you, automating even more of the 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:
First quarter (January through March): due April 30
Second quarter (April through June): due July 31
Third quarter (July through September): due October 31
Fourth quarter (October through December): due January 31
If a due date falls on a weekend or holiday, you may file on the next business day. Filing late can result in interest assessments and may increase your UI rate in future years.
How to submit payroll taxes in New York
New York state mandates that business taxpayers file returns and make payments electronically. Here are your options.
Enroll in e-Services
The Department of Taxation and Finance provides an online portal for filing and payment. Go to tax.ny.gov, follow the instructions to set up an account, and pay from there. You can also receive bills online.
File by mail
The e-filing mandate applies to most returns, but there are two exceptions: employers filing an amended NYS-45-X form or an amended NYS-45-ATT must mail a paper copy. Amended returns cannot be submitted online. Mailing instructions are available here.
Rippling's full-service payroll software
For an even simpler approach, Rippling's payroll software automates all compliance work and files your federal and New York state and local payroll taxes with the IRS, Department of Taxation and Finance, and any other applicable agencies at the right time.
Simplify New York payroll taxes with Rippling
New York's payroll tax landscape is one of the most demanding in the country. Between six separate tax obligations, location-based rules for NYC and Yonkers employees, a UI wage base that now adjusts annually, and quarterly filing deadlines across multiple agencies, even a small misstep can trigger penalties or knock your UI rate up for years. The more employees you have, and the more they earn, the more variables there are to track.
That's where Rippling Payroll comes in. Rippling automatically calculates, withholds, and files every federal, state, and local payroll tax on your behalf, including UI, PFL, SDI, MCTMT, and income tax withholding for NYC and Yonkers. Because Rippling is a unified HR, IT, and finance platform, payroll isn't siloed: employee data flows directly from onboarding into payroll, benefits, and compliance without any manual re-entry. When an employee's address, salary, or benefits elections change, payroll updates automatically. And with Rippling's PEO, Rippling can register and maintain your New York state tax accounts for you entirely, so you can focus on running your business rather than managing the tax infrastructure behind it.
Frequently Asked Questions
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.
What is New York's Paid Family Leave contribution rate for 2026?
For 2026, the New York Paid Family Leave (NYPFL) employee contribution rate is 0.432% of gross wages, with an annual cap of $411.91 per employee. Once an employee's year-to-date PFL deductions reach $411.91, withholding stops for the remainder of the calendar year. The maximum weekly PFL benefit for 2026 is $1,228.53 (67% of the statewide average weekly wage). The contribution is funded entirely through employee payroll deductions — employers do not contribute. Coverage is obtained through a private carrier or the New York State Insurance Fund (NYSIF).
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 New York's state disability insurance (SDI) and who pays for it?
New York's State Disability Insurance (SDI) program provides temporary income replacement to employees who are unable to work due to a non-work-related illness, injury, or pregnancy. The cost is primarily borne by the employer, but employers may withhold up to 0.5% of an employee's wages, capped at $0.60 per week ($31.20 per year), to offset the cost. Employers must obtain SDI coverage through either a private insurance carrier or the New York State Insurance Fund (NYSIF). Employers with at least one employee who works at least 30 days in a calendar year are required to carry SDI coverage. Note that an employee cannot collect SDI and Paid Family Leave benefits simultaneously, and combined benefits cannot exceed 26 weeks in any 52-week period.
What is the New York unemployment insurance wage base for 2026?
The New York unemployment insurance (UI) wage base for 2026 is $17,600. This is the portion of each employee's wages subject to UI contributions each calendar year. Starting in 2026, the wage base permanently adjusts each January 1 to 18% of the state average annual wage, rounded up to the nearest $100, so it will increase automatically year over year as wages rise.
What are the New York state income tax rates for 2026?
New York state income tax rates for 2026 range from 4% to 10.9%, applied on a progressive basis. Residents of New York City also owe a local income tax ranging from 3.078% to 3.876%. Yonkers residents pay a local income tax surcharge of 16.75% of their state income tax liability. Employers are responsible for withholding the applicable state and local income tax from each employee's paycheck each pay period.
Which employers must pay the MCTMT in New York?
The Metropolitan Commuter Transportation Mobility Tax (MCTMT) applies to employers whose quarterly payroll expense for employees working within the Metropolitan Commuter Transportation District (MCTD) exceeds $312,500. The MCTD covers New York City's five boroughs plus Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester counties. The tax rate is 0.34% of payroll expense and is paid by the employer only — it is not withheld from employees. Employers report and pay MCTMT through the New York State Department of Taxation and Finance.
Are New York employers required to carry workers' compensation insurance?
Yes. New York requires virtually every employer to carry workers' compensation insurance, even if you have just one employee. This applies to full-time, part-time, and certain seasonal workers. Coverage can be obtained through a private insurance carrier, the New York State Insurance Fund (NYSIF), or by self-insuring if you meet state requirements. Failing to carry workers' compensation coverage can result in significant fines and stop-work orders from the Workers' Compensation Board.
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.
Author
Vanessa Kahkesh
Content Marketing Manager, HR
Vanessa Kahkesh is a content marketer for HR passionate about shaping conversations at the intersection of people, strategy, and workplace culture. At Rippling, she leads the creation of HR-focused content. Vanessa honed her marketing, storytelling, and growth skills through roles in product marketing, community-building, and startup ventures. She worked on the product marketing team at Replit and was the founder of STUDENTpreneurs, a global community platform for student founders. Her multidisciplinary experience — combining narrative, brand, and operations — gives her a unique lens into HR content: she effectively bridges the technical side of HR with the human stories behind them.
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