New York Payroll Guide

 

New York Payroll Tax Guide (2026)

The headline number for 2026 is the unemployment wage base, which jumped from $12,800 to $17,600 when New York moved to indexing it at 18% of the state average annual wage, a 37.5% increase in taxable payroll for every worker.[9]

10 min read • Reviewed by Rajanikant Patel CPA • Verified • Sources: NYS Tax Department, NYSDOL, IRS
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Quick Facts

New York payroll at a glance

New York layers several charges on employers and two deductions on workers: state income tax withholding, unemployment tax, the commuter mobility tax in the MTA region, plus employee paid family leave and disability benefits contributions.[9]

State income tax withholding
3.90%–10.90% [1]
UI taxable wage base
$17,600 per employee [9]
New employer UI rate
4.10% [9]
Experienced UI rate range
1.70%–9.50% [9]
Paid Family Leave employee contribution, withheld from employee
0.432%, $95,349 [11]
Re-employment Service Fund
0.075% [1]
Social Security wage base
$184,500 [2]
FUTA net rate
0.6% = $42 per employee [13]
State minimum wage
$17.00 per hour [10]
Local minimum wage ordinances
None [10]
UI registration trigger
A general business employer becomes liable from the first day of the… [9]
Exempt salary threshold
$66,300 per year [10]
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What changed for New York payroll in 2026

Six items moved for New York employers this year. Anything below is what have changed since the 2025 tables, so a rate card carried over from last year will be wrong in at least one place.

UI wage base jumps to 17,600 No FUTA credit reduction for 2025 Paid family leave at 0.432% Income tax rates cut for 2026 Minimum wage 17.00 and 16.00 First full year of new MCTMT tiers
Budgeting 2026 unemployment tax off last year’s wage base: New York’s taxable wage base went from $12,800 to $17,600 on 1 January 2026, a 37.5% jump, because the state switched to indexing it at 18% of the state average annual wage. An employer sitting at the 4.10% new employer rate now pays about $722 per worker for the year instead of about $525. Any accrual, budget or client quote built on the old base will run short in every quarter of 2026.[2]
Estimate

2026 New York payroll tax calculator

Enter one employee’s annual gross wages to see what the employer owes, what comes out of the paycheque, and the true cost of employment.

New York · 2026 rates · per employee, per calendar year
Cash wages subject to payroll tax, before any withholding.
Your exact rate is on the Annual unemployment insurance rate notice, mailed by the Department of Labor well before the 30 April first quarter due date and also viewable in Online Services.
FUTA is 6.0% less a 5.4% credit where the state has no outstanding federal loan.

Employer pays

UI, on first $17,600–
Re-employment Service Fund, on first $17,600–
MCTMT, Zone 1 employers, on all wages–
MCTMT, Zone 2 employers, on all wages–
FUTA, on first $7,000–
Social Security, 6.2%–
Medicare, 1.45%–
Employer payroll tax–

Withheld from the employee

Paid Family Leave employee contribution, 0.432%, to $95,349–
Disability Benefits Law employee contribution, 0.5%, no cap–
Social Security, 6.2%–
Medicare, 1.45%–
Additional Medicare, 0.9% over $200,000–
Withheld from employee–
True cost of employment–
Employer tax as % of wages–
Total payroll tax, both sides–

State income tax withholding is not included above: it depends on the employee’s Form IT-2104, Employee’s Withholding Allowance Certificate and filing status, so it cannot be estimated from gross pay alone.

Rates & Nexus

Payroll tax rates & the nexus question

New York runs 7 state payroll taxes. The table below is the whole state layer for 2026.[9]

The state payroll taxes

TaxPaid by2026 rateWage base
UIEmployer1.70%–9.50%; 4.10% new$17,600
Re-employment Service FundEmployer0.075%$17,600
MCTMT, Zone 1 employersEmployer0.055% to 0.895%All wages
MCTMT, Zone 2 employersEmployer0.055% to 0.635%All wages
Paid Family Leave employee contributionEmployee0.432%$95,349
Disability Benefits Law employee contributionEmployee0.50%No limit
Income tax withholdingEmployee3.90%–10.90%No limit

For 2026 the Department of Labor publishes a span of 1.625 to 9.425% of unemployment tax plus a flat 0.075% Re-employment Service Fund charge, giving 1.70 to 9.50% all in. The new employer normal contribution rate is 3.4%, which lands at 4.025% once the subsidiary rate is added and 4.10% once the service fund is added. From 2026 the wage base is set at 18% of the state average annual wage rounded up to the nearest $100 and cannot fall below the prior year. The UI rate alone runs 1.625% to 9.425%; a flat 0.075% Re-employment Service Fund applies to every contributory account on top.[9]

Supplemental wages have their own rate. Bonuses, commissions and other supplemental payments are withheld at 11.70% when paid separately from regular wages. That is a state rate only; federal supplemental withholding is a separate 22% layer.[1]

Who has to register

A general business employer becomes liable from the first day of the calendar quarter in which it pays remuneration totalling $300 or more, or on becoming the successor to a liable employer. The same 300 dollar test applies to agricultural employers for state purposes. A household employer registers once it pays cash remuneration of $500 or more in a calendar quarter.[9] Income tax withholding is administered separately by New York State Department of Taxation and Finance, so most employers end up with two state account numbers, not one.

Multistate and remote employees

When an employee works in more than one state, the four-part test below decides which state the wages are reported to. The tests run in order: you stop at the first one that gives an answer.

  • 1. Localisation of service→
  • 2. Base of operations→
  • 3. Place of direction & control→
  • 4. Employee’s residence

One remote employee is usually enough. A single person working from home in New York generally creates an obligation to register and report wages here, even if the business has no office, property or customers in the state.

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Compliance

Registration & return filing

Registration is online and free. The unemployment account and, where one exists, the withholding account are opened separately and carry different numbers.[9]

How to register

  • Cross the wage threshold→
  • New York State Online Services, which handles both the NYS-45 filings and the employer’s unemployment insurance account, alongside SIDES for claim exchanges→
  • Receive account number→
  • Annual unemployment insurance rate notice, mailed by the Department of Labor well before the 30 April first quarter due date and also viewable in Online Services→
  • File & deposit online

A general business employer becomes liable from the first day of the calendar quarter in which it pays remuneration totalling $300 or more, or on becoming the successor to a liable employer. The same 300 dollar test applies to agricultural employers for state purposes. A household employer registers once it pays cash remuneration of $500 or more in a calendar quarter.[9]

Deposit schedule

The trigger is an accumulation, not a calendar. You file Form NYS-1 and remit after any payroll that brings accumulated withholding to $700 or more. If you were required to withhold $15,000 or more in the calendar year before the previous one you have three business days to do it, and everyone else has five. If you never reach $700 during a quarter you skip Form NYS-1 entirely and pay with the quarterly return.[1]

Returns, reports & due dates

FormWhat it isDue
Form NYS-45, Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance ReturnQuarterly unemployment returnApril 30, July 31, October 31, January 31
Form NYS-1 for deposits and Form NYS-45, the combined quarterly withholding, wage…Income tax withholding returnsThe trigger is an accumulation, not a calendar. You file Form NYS-1 an
Annual reconciliationYear-end withholding reconciliationJanuary 31
Form 941Federal quarterly returnLast day of the month after quarter end
Form 940Federal unemployment, annualJanuary 31
New hire reportReport of newly hired employeesWithin 20 days of start date

Quarterly unemployment returns are due April 30, July 31, October 31, January 31. A return filed one day late is delinquent, and in most states the penalty attaches to the return, not the payment.[9]

Pricing

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Year-end filings
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Per employee, per pay run
$6 /emp
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Wage Base

Subject wages vs. exempt payments

Not every dollar an employee receives is a taxable wage. The split below governs what goes into the unemployment wage base and what is reported at year end.[9]

Subject wages

  • Salaries, hourly pay, overtime and piece rates
  • Commissions, bonuses and incentive pay
  • Most cash tips reported by the employee
  • Vacation, holiday and paid sick leave when taken as wages
  • Severance and payments in lieu of notice
  • The cash value of meals and lodging provided as compensation
  • Employer contributions to a non-qualified deferred compensation plan
  • Wages subject to the employee-paid contributions listed above

Not subject

  • Reimbursements of genuine business expenses under an accountable plan
  • Employer contributions to a qualified retirement plan
  • Employer-paid premiums for accident and health insurance
  • Most third-party sick pay after the sixth calendar month
  • Payments to a genuine independent contractor
  • Workers compensation benefits

The wage base is per employer, per year, not per job. If you hire someone in August who already earned $17,600 elsewhere, your unemployment clock still starts at zero. The one exception is a successor employer taking over an existing payroll, who inherits the wages already paid.

Reference

Glossary of key terms

Taxable wage base
The slice of each employee’s annual pay that unemployment tax is calculated on. In New York that is $17,600 for 2026. Earnings above it are still wages, they are simply no longer taxed for unemployment.
Paid Family Leave employee contribution
An employee-funded contribution withheld from pay at 0.432%. It is the employee’s money, so it is withheld rather than paid by the employer, but the employer is responsible for remitting it.
Experience rating
The method New York State Department of Labor uses to set each employer’s own unemployment rate from its history of claims. Employers with fewer charged claims move down the schedule; those with more move up.
New employer rate
The rate assigned before an employer has enough history to be experience rated. It normally applies for two to three years, then the account moves onto the experience schedule.
Form IT-2104, Employee’s Withholding Allowance Certificate
The state withholding certificate. It sets how much income tax comes out of each cheque and is filed with the employer, not with New York State Department of Taxation and Finance.
Reserve account
The running balance of contributions an employer has paid in, less the benefits charged against it. The ratio of that balance to taxable payroll is what drives the assigned rate.
Successor employer
A business that acquires another’s payroll may inherit both its experience rate and the wages already paid toward the wage base for the year. Getting this wrong is a common acquisition error.
Localisation of service
The first of four tests deciding which state a multistate employee’s wages are reported to. If substantially all the work is in one state, that state wins and the remaining tests are never reached.
FUTA credit reduction
A reduction in the 5.4% federal unemployment credit applied to states that have carried an outstanding federal loan for two or more consecutive Januaries. It raises the effective FUTA rate and is settled each November.
Supplemental wages
Bonuses, commissions, awards and similar payments made outside the regular payroll cycle. Many states set a separate flat withholding rate for them.
Local withholding
Income or occupational tax levied by a city, county or school district and withheld by the employer alongside state tax. It is assessed separately from the state layer.
Federal, State & Local

New York payroll tax, layer by layer

Federal tax applies everywhere and is the larger number. The state layer is what changes when you cross a border.

Layer 1: Federal

TaxRate2026 base
Social Security6.2% each side$184,500
Medicare1.45% each sideNo limit
Additional Medicare0.9% employee onlyOver $200,000
FUTA, standard0.6% net$7,000
Federal income taxPer Form W-4No limit

New York has no FUTA credit reduction for 2026, so the standard 0.6% net rate applies, $42 per employee. The final list is not published until 10 November 2026.[13]

Layer 2: State

TaxRate2026 base
UI, new employer4.10%$17,600
UI, experienced1.70%–9.50%$17,600
Re-employment Service Fund0.075%$17,600
MCTMT, Zone 1 employers0.055% to 0.895%All wages
MCTMT, Zone 2 employers0.055% to 0.635%All wages
Paid Family Leave employee contribution, employee0.432%$95,349
Disability Benefits Law employee contribution, employee0.50%No limit
Income tax, standard3.90%–10.90%No limit
Income tax, supplemental11.70%No limit

Layer 3, county & city: a real third layer

New York City residents pay a city personal income tax that the employer withholds using Publication NYS-50-T-NYC, and the city supplemental rate for bonuses is 4.25%. Yonkers residents pay a surcharge equal to 16.75% of their net state tax, withheld at a supplemental rate of 1.95975%, and people who work in Yonkers but live elsewhere pay a nonresident earnings tax of 0.50%. No other New York locality taxes wages, and all of it is reported on the same Form NYS-45 as state withholding.[5]

The state minimum wage is $17.00 an hour, effective 2026-01-01. The tipped cash wage is $11.35. No local ordinance sets a higher floor. New York sets the rate by region rather than by city ordinance, so no separate local minimum wage exists. New York City, Nassau, Suffolk and Westchester are at $17.00 and the rest of the state is at $16.00. Food service workers may be paid a cash wage of $11.35 downstate and $10.70 upstate, and other service employees $14.15 and $13.30, with the tip credit available only to hospitality employers. Beginning in 2027 the minimum wage is indexed to a three year average of the Consumer Price Index for the Northeast, subject to economic and budget conditions that can suspend a scheduled increase.[10]

Overtime exemption is a separate test. A salaried employee is exempt from overtime only above $66,300 a year ($1,275.00 a week) state rule, and only if the duties test is also met. Paying a salary is not by itself enough.[10]

FAQ

New York payroll FAQs

The rate did not have to move for the bill to grow. The taxable wage base rose from $12,800 to $17,600 on 1 January 2026 because New York now sets it at 18% of the state average annual wage, rounded up to the nearest $100. That is 4,800 more dollars of taxable wages per employee, so at a 4.10% rate the cost per worker goes from roughly $525 to roughly $722.

An employer owes MCTMT once its payroll expense for covered employees across both MTA zones tops $312,500 in a quarter. Zone 1 is Manhattan, the Bronx, Brooklyn, Queens and Staten Island, and the rates run 0.055%, 0.115%, 0.60% and 0.895% as quarterly payroll expense passes 375,000, 437,500 and $2,500,000. Zone 2 covers Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester on the same brackets, topping out at 0.635%.

For 2026 the employee contribution is 0.432% of gross wages each pay period, capped once the employee reaches the annualised state average weekly wage of $1,833.63 a week. That caps the annual deduction at $411.91. Employers make no contribution of their own, and the coverage funds up to 12 weeks of leave at a maximum weekly benefit of $1,228.53.

Not for 2025. The Department of Labor notice confirms that New York repaid its outstanding federal advances before 10 November 2025, so New York employers were not subject to a credit reduction on the Form 940 filed in January 2026 and paid the full 0.6% net rate. Only California and the US Virgin Islands are on the potential list for 2026, and that determination is not final until 10 November 2026.

The New York State supplemental rate for 2026 is 11.70%. If the employee is a New York City resident add the city supplemental rate of 4.25%. A Yonkers resident carries a supplemental rate of 1.95975%, and someone who works in Yonkers but lives elsewhere carries the 0.50% nonresident earnings tax.

New York sets its own bar and it is well above the federal one. From 1 January 2026 an executive or administrative employee must be paid at least $1,275.00 a week, or $66,300 a year, in New York City and in Nassau, Suffolk and Westchester counties, and at least $1,199.10 a week elsewhere in the state. New York has no state salary test for the professional exemption, so the federal $684 a week applies to those employees.

$17,600 per employee per calendar year. Once an employee reaches that in wages from you, no further unemployment tax is due on that employee for the rest of the year. The count restarts on 1 January and does not carry over from a previous employer.

$17.00 an hour. No local ordinance sets a higher rate. The tipped cash wage is $11.35.

April 30, July 31, October 31, January 31. A return is delinquent the day after the deadline even if the tax itself was paid on time, so file the return whether or not you can pay.

Verification

Sources & methodology

  1. New York State Department of Taxation and Finance – Publication NYS-50, Employer’s Guide to Unemployment Insurance, Wage Reporting, and Withholding Tax
  2. New York State Department of Taxation and Finance – Instructions for Form NYS-45, Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return
  3. New York State Department of Taxation and Finance – Instructions for Form NYS-1, Return of Tax Withheld
  4. New York State Department of Taxation and Finance – Publication NYS-50-T-NYS, New York State Withholding Tax Tables and Methods, effective January 1 2026
  5. New York State Department of Taxation and Finance – Publication NYS-50-T-NYC, New York City Withholding Tax Tables and Methods, effective January 1 2026
  6. New York State Department of Taxation and Finance – Publication NYS-50-T-Y, Yonkers Withholding Tax Tables and Methods, effective January 1 2026
  7. New York State Department of Taxation and Finance – Metropolitan Commuter Transportation Mobility Tax for Employers
  8. New York State Department of Taxation and Finance – Metropolitan Commuter Transportation Mobility Tax
  9. New York State Department of Labor – Unemployment Insurance Rate Information
  10. New York State Department of Labor – Minimum Wage Frequently Asked Questions
  11. New York State Paid Family Leave – New York Paid Family Leave 2026 Updates
  12. New York State Workers’ Compensation Board – Introduction to the Disability Benefits Law
  13. Federal Register, U.S. Department of Labor – Notice of the Federal Unemployment Tax Act (FUTA) Credit Reductions Applicable for 2025
  14. New York State Senate – New York Tax Law Section 601, Imposition of Tax
Methodology: every rate, threshold and due date on this page was taken from the administering agency’s own published material for the 2026 tax year, checked on Oct 1, 2026. Where a federal figure applies it comes from the IRS, SSA or US Department of Labor. 6 data points on this page could not be confirmed against a primary source and are either omitted or marked as not published, rather than estimated. Rates change, and some change mid-year, so confirm against your own rate notice before running a payroll.
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